Your taxes and the Obamacare 1095 form

Most of you have received your W-2 forms already and have filed -- or will be filing soon -- your income tax returns. Some early-filing taxpayers, either when meeting with an unsuspecting tax professional or doing taxes on their own, have come up to an obstacle: They’re told they need their 1095.

You don’t need it. Well, at least for 2015 taxes…and only if your health insurance was provided by your employer or the government.  

Before we get into that, let’s look at the background of the 1095.

The federal government wants to make good on its Affordable Care Act edict that everyone must be insured. So, this is the first year that tax forms will officially reflect that with reliance on supporting documentation. It’s a quick and easy way for the IRS to figure out who they have to smack with the non-compliance fee (which the Supreme Court called a tax) which is 2 percent of the annual household income for those were uninsured for all or part of 2015. It’s a far more severe penalty than last year’s.

The IRS is demanding proof of coverage in the form of a 1095, which is more or less the insurance version of the W-2 which serves as your proof of income and the accompanying tax withdrawals. Individuals who purchased insurance on their own from a government exchange will receive form 1095-A. Those who received insurance from the government (Medicare, Medicaid, the VA, etc.) will receive form 1095-B. Those who work for a company with 50 or more employees will receive form 1095-C from their bosses.

While the exchanges are ready to produce the forms, state governments (the administrators of Medicaid), employers who manage their own payroll, and payroll processing firms like Paychex, ADP and thousands of smaller ones across the country are, for the most part, not prepared. The same can be said for the employers and employees who will receive the 1095s from those firms (those same employers have to file the related 1094-C). Therefore, they have all been granted extensions. January 31 was the original deadline to provide those forms to the insured. The IRS moved that to March 31.

The IRS is encouraging anyone who bought insurance on the exchange to wait for their 1095-A before filing taxes.

As for those who will receive a 1095-B or 1095-C, the IRS says that you do not have to wait for your forms to file your taxes since they won’t come until too close to the April 15 Tax Day. The IRS also says that upon receipt of the forms you do not have to re-file your taxes or amend your returns. This year, they will take you on your word that you were insured. But, they encourage you to hold on that somewhat obsolete 1095 in the event that you are audited by the agency.

Going forward, the use of – and keeping of – 1095-B and 1095-C forms will be required. You will need the form when filing your tax returns at this time next year. 1095-A forms are considered “live” this year.

It’s confusing, but who ever said taxes were supposed to be easy?

From the 01 February 2016 Greater Niagara Newspapers