1095-A Form Updates from Treasury and IRS April

Get the latest 1095-A information from the Treasury department and IRS released on April 3rd, 2015. Those who filed won’t be penalized, but can amend their tax return with the correct information if it benefits them. Those who haven’t filed yet should file Form 4868 to request an automatic extension until October 15.

Summary of the Treasury and IRS Updates

Here is a quick overview of what the Treasury statement and IRS FAQ (reprinted below):

• Those who got Marketplace tax credits need the 1095-A to file form 8962 – Premium Tax Credit. Stand-alone dental plans and catastrophic plans do not qualify for the premium tax credit and thus don’t require a 1095-A. All non-Marketplace 1095 forms are deferred until next year.
• On February 20, 2015, the Centers for Medicare and Medicaid Services (CMS) announced that about 800,000 tax filers who purchased health insurance from the Federally-facilitated Marketplace during 2014 received a Form 1095-A with incorrect information on it.
• The part of the 1095-A form that was incorrect was the price of the second lowest cost Silver plan (often referred to as the benchmark plan). If you want to double check that your 1095-A form has the correct information you can use the second lowest cost silver plan tax tool. As long as you have a 1095-A you can file.
• On February 24, 2015, the Department of the Treasury issued a statement concluding: “If you already field using an incorrect 1095-A, you don’t need to amend it.” The IRS will not pursue the collection of any additional taxes from individuals who filed based on updated information in the corrected forms. On March 20, 2015, Treasury expanded that relief to apply to additional situations faced by tax filers.
• If you didn’t file yet and are still having issues you should file Form 4868 (request for an automatic extension) with the IRS by April 15. Treasury and IRS intend to release guidance shortly implementing penalty relief for individuals in this situation as long as they file a return by October 15. If you pay at least 90% of your taxes when you file form 4868 then you are considered to have “reasonable cause” and won’t owe a penalty. This can be paid through withholding, estimated tax payments, or payments made with Form 4868.
• If a taxpayer receives their Form 1095-A before April 15 and is able to file using the form before the deadline, they should do so.
• Although it is not advised by the IRS or Treasury department in the statements, a person would be able to find all the information on a 1095-A themselves. You can learn more about finding your 1095-A information here. The IRS may not accept your return until your 1095-A is officially filed by the marketplace on your behalf, however finding your own 1095-A info will allow you to complete your 1040 so you aren’t waiting until the last minute. You may way to file an extension, and use a self filed 1095-A to help you estimate your return.
• Individuals also may want to consult with their tax preparers to determine if they would benefit from amending.Typically using the incorrect 1095-A data won’t throw off return amounts by much, and will actually benefit the filer. However, some will benefit from amending their return depending on their Modified Adjusted Gross Income.

Clarification on “should I file with an incorrect 1095-A, should I correct my own, or should I wait?”: Reading through the Q&A it seems that if you have a 1095-A you can simply double check the information and file. The Treasury statements eludes to waiting for the correct form, but IRS Q&A answer A6 says, “If you have not yet filed your income tax return you should file by April 15 using either the Form 1095-A that you have received or the corrected form, if available. If you file based on this original Form 1095-A, you will not need to amend your income tax return when you receive the corrected Form 1095-A.  Nonetheless, you may choose to file an amended return. Alternatively, you may file for an extension of time to file.”)

Statement from a Treasury Spokesperson on Forms 1095-A

The information below is from a Treasury department statement issued on April 3rd, 2015.

4/3/2015

WASHINGTON – Today, the Department of the Treasury and the IRS are announcing penalty relief for individuals enrolled in qualifying Marketplace coverage who are unable to file an accurate tax return by April 15 due to problems related to a Marketplace tax statement  (Form 1095-A). Taxpayers in this situation should file Form 4868 (request for an automatic extension) with the IRS by April 15.  When taxpayers receive their Form 1095-A, they should file their return using the information from the form.  Treasury and IRS intend to release guidance shortly implementing penalty relief for individuals in this situation as long as they file a return by October 15.   If a taxpayer receives their Form 1095-A before April 15 and is able to file using the form before the deadline, they should do so.

This builds on previously announced relief that any individual who enrolled in qualifying Marketplace coverage, received an incorrect Form 1095-A, and filed his or her tax return based on that form does not need to file an amended tax return.  The IRS will not pursue the collection of any additional taxes from these individuals based on updated information in the corrected forms.  Some individuals may choose to file amended returns.  Individuals also may want to consult with their tax preparers to determine if they would benefit from amending.

Only a small fraction of tax filers received incorrect Forms 1095-A.  Treasury estimates that in the vast majority of these cases, the impact on an individual’s tax liability will be very small.

IRS 1095-A FAQ

The following information is from an IRS published article Questions and Answers – Incorrect Forms 1095-A and the Premium Tax Credit

On February 20, 2015, the Centers for Medicare and Medicaid Services (CMS) announced that about 800,000 tax filers who purchased health insurance from the Federally-facilitated Marketplace during 2014 received a Form 1095-A, Health Insurance Marketplace Statement, that contained an error related to the second lowest cost Silver plan (often referred to as the benchmark plan). On February 24, 2015, the Department of the Treasury issued a statement concluding that those affected taxpayers who had already filed an income tax return using the incorrect form do need not amend their income tax return. On March 20, 2015, Treasury expanded that relief to apply to additional situations faced by tax filers.  Treasury and IRS now intend to provide penalty relief for  individuals who are unable to file a complete and accurate return by April 15 due to a delayed Form 1095-A or a Form 1095-A that the taxpayer believes to be incorrect.

The March 20, 2015, guidance was in the form of frequently asked questions, which are incorporated into the FAQs below.  Additional FAQs have been added to the original to provide further details about it how the rules apply to specific circumstances.

Question 1: What relief was announced on March 20, 2015?

Answer 1: On March 20, in light of CMS’s announcement of additional incorrect information on certain Marketplace tax statements (Forms 1095-A), the Department of the Treasury expanded the relief it announced previously on February 24.  If you were enrolled in qualifying Marketplace coverage, filed your return using information from your Form 1095-A, Health Insurance Marketplace Statement, and you later learn that the information on that form was incorrect, you do not need to file an amended return. This is true even if additional taxes would be owed based on the new information.  Under the relief provided, the IRS will not pursue the collection of any additional taxes from you based on updated information in the corrected form. This relief applies to tax filers who enrolled through the Federally-facilitated Marketplace or a State-based Marketplace. Even though you are not required to file an amended tax return, some taxpayers may choose to do so if the updated information is in their favor. You may want to consider consulting with a tax preparer to determine if you want to file an amended return.

Question 2: What additional relief is being announced?

Answer 2: In light of some tax filers not receiving their correct Forms 1095-A, Health Insurance Marketplace Statement, in time, the Treasury Department and IRS plan to release guidance providing penalty relief for individuals who are unable to file an accurate return by April 15. Generally, in order to qualify for this relief, taxpayers must file either Form 1040 (series) or Form 4868  (requesting an automatic extension) by April 15.   A return must be filed by Oct. 15.  More specifics on the relief will be included in the upcoming guidance.

Question 3 How will I know if my Form 1095-A is wrong or delayed?

Answer 3: If you received your coverage through a Marketplace, you may have received an incorrect Form 1095-A, Health Insurance Marketplace Statement, or your form may have been delayed. If you are affected, the Marketplace will notify you by email, phone, or through your Marketplace account.  The Marketplaces have been notifying individuals who are affected by these additional errors. If you identify errors on your own have questions about your form, reach out to the Federally-facilitated Marketplace call center at 1-800-318-2596 or your State-based Marketplace.

Taxpayers who have not yet filed their 2014 income tax return

Q4. I received a Form 1095-A, Health Insurance Marketplace Statement, but I have not filed my income tax return. The Marketplace notified me that it would issue me a corrected Form 1095-A, but I have not yet received it.  What should I do?

A4.  If you have not yet filed your income tax return you should file by April 15 using either the Form 1095-A that you have received or the corrected form, if available.  If you file based on this original Form 1095-A, you will not need to amend your income tax return when you receive the corrected Forms 1095-A. Nonetheless, you may choose to file an amended return.   Alternatively, you may also file for an extension of time to file.  See question 16 for additional information about filing an amended return.

Q5. I received a Form 1095-A, Health Insurance Marketplace Statement, but I have not filed my income tax return. The Marketplace notified me that the Form 1095-A was issued to me in error and should be disregarded.  What should I do?

A5.  If you were told to disregard a Form 1095-A, you should file your tax return by April 15 and should not include information from that 1095-A on your return. The premium tax credit is available only for eligible taxpayers who enrolled in qualifying Marketplace coverage.  If you never paid premiums for your coverage then you were not enrolled in coverage. In addition, stand-alone dental plans and catastrophic plans do not qualify for the premium tax credit.

Q6. I noticed an error on my Form 1095-A, Health Insurance Marketplace Statement, and called my Marketplace.  My Marketplace is currently reviewing the issue and informed me that they may be issuing a corrected Form 1095-A, but I have not heard back. I did not yet file my income tax return. What should I do?

A6. If you have not yet filed your income tax return you should file by April 15 using either the Form 1095-A that you have received or the corrected form, if available.  If you file based on this original Form 1095-A, you will not need to amend your income tax return when you receive the corrected Form 1095-A.  Nonetheless, you may choose to file an amended return.  Alternatively, you may file for an extension of time to file.  See question 8 for additional information about requesting an extension.

Q7. I noticed an error on my Form 1095-A, Health Insurance Marketplace Statement, and have not yet called my Marketplace.  What should I do?

A7. If you believe there may be an error on your Form 1095-A, you should contact your Marketplace about your concerns.  However, it is uncertain when the issue will be resolved. If you have not yet filed your income tax return, you should file by April 15 using either the Form 1095-A that you have received or the corrected form, if available.  If you file based on this original Form 1095-A, you will not need to amend your income tax return when you receive the corrected Form 1095-A.  Alternatively, you may file for an extension of time to file.  See question 8 for additional information about requesting an extension.

Q8. I purchased qualifying Marketplace coverage, and advance payments of the premium tax credit were made to an insurance provider on my behalf.  I have not received a Form 1095-A, Health Insurance Marketplace Statement, and have not yet filed my income tax return.  Should I wait to file my return until I receive a Form 1095-A?

A8. If you have not yet filed your income tax return, you should file Form 4868 (request for an automatic extension) by April 15.  Then, once you receive your Form 1095-A, you should file your tax return using the information from the form. Please note that if you file a Form 4868, you have an extended time to file, but not an extension to pay any tax you owe. Form 4868 provides further information. Form 4868 is available on IRS.gov, through tax software or from a tax professional.  Of course, if you receive your Form 1095-A before April 15 and are able to file using the form, you are encouraged to do so.

Q9. I purchased qualifying Marketplace coverage, and advance payments of the premium tax credit were made to an insurance provider on my behalf.  I just got my Form 1095-A, Health Insurance Marketplace Statement, and cannot file by April 15.  What should I do?

A9.If you cannot file your income tax return by April 15, you should file Form 4868 (request for an automatic extension) by April 15.  Then, as soon as you can, you should file your tax return, using the information from your Form 1095-A.  Please note that if you file a Form 4868, you have an extended time to file, but not an extension to pay any tax you owe. Form 4868 provides further information. Form 4868 is available on IRS.gov, through tax software or from a tax professional.

Q10.  I purchased qualifying Marketplace coverage and advance payments of the premium tax credit were made to an insurance provider on my behalf.  I did not receive a Form 1095-A, Health Insurance Marketplace Statement, or received my Form 1095-A late, and therefore was unable to file my income tax return by April 15. I filed a Form 4868 for a six-month extension and made a payment with that form. When I get my Form 1095-A and file my income tax return, will I be subject to penalties for paying my income taxes late?

A10.  No.  You are considered to have reasonable cause for the period covered by this automatic extension if you paid at least 90 percent of the taxes you owed for 2014 before the regular due date. This can be paid through withholding, estimated tax payments, or payments made with Form 4868. Most taxpayers in this circumstance will qualify for reasonable cause.  If you do not meet these requirements for reasonable cause, Treasury and IRS intend to provide additional penalty relief for taxpayers who received a delayed Form 1095-A or a Form 1095-A that they believed to be incorrect and consequently were unable to pay the taxes they owed by April 15.

Taxpayers who have filed their 2014 return

Q11.  I enrolled in qualifying Marketplace coverage, received a Form 1095-A, Health Insurance Marketplace Statement, and filed my federal income tax return using this Form 1095-A. I received a notice that the Form 1095-A I used had incorrect information. Do I need to file an amended return?

A11. No.  If you enrolled in qualifying Marketplace coverage, received a Form 1095-A, and filed your tax return based on that form, you do not need to file an amended return based on your corrected Form 1095-A.  This is true even if additional taxes would be owed based on the new information.  Nonetheless, you may choose to file an amended return.  You should consider consulting with a tax advisor to determine if you want to file an amended return.

Q12.  The information in my corrected Form 1095-A, Health Insurance Marketplace Statement, would cause my federal income tax payment to decrease or my refund to increase.  Can I file an amended return since this change is in my favor?

A12.  Yes.  In some cases, the information on the corrected Form 1095-A may be in your favor – it may decrease the amount of taxes you owe or increase your refund.  Taxpayers have the option of filing an amended return if they choose. Generally, taxpayers have up to three years from the date they filed their return, or two years from the date they paid the tax, whichever is later, to file an amended return.  You should consider consulting with a tax advisor to determine if you want to file an amended return.

Q13. I received a Form 1095-A, Health Insurance Marketplace Statement, which I used to file my income tax return and claim the premium tax credit. After I filed, the Marketplace notified me that the Form 1095-A was issued in error because I never completed enrollment or because the Form 1095-A was incorrectly issued for coverage that does not qualify for the premium tax credit.  Should I file an amended return?

A13. Yes, you should file an amended return. The premium tax credit is available only for eligible taxpayers who enrolled in qualifying Marketplace coverage.  If you never paid premiums for your coverage then you were not enrolled in coverage. In addition, stand-alone dental plans and catastrophic plans do not qualify for the premium tax credit.  If you filed and incorrectly claimed a premium tax credit based on these forms, and you do not amend your return, the IRS may contact you about additional tax due.

Q14. I purchased qualifying Marketplace coverage, and advance payments of the premium tax credit were made to an insurance provider on my behalf. I filed without receiving my Form 1095-A, Health Insurance Marketplace Statement, and did not include that information when I filed my taxes. Should I file an amended return?

A14. Yes, you should file an amended return. You are required to reconcile advance payments of the premium tax credit made to your insurer on your behalf through the Marketplace to ensure you receive the correct amount of tax credits. You agreed to this process when you enrolled in the Marketplace.  If you filed an income tax return and failed to reconcile your credits, you should file an amended return, using the information on your Form 1095-A.  If you do not have a copy of your Form 1095-A, reach out to the Federally-facilitated Marketplace call center at 1-800-318-2596 or your State-based Marketplace. See question 16 for additional information about filing an amended return.

Q15. I purchased qualifying Marketplace coverage, and advance payments of the premium tax credit were made to an insurance provider on my behalf. I filed without receiving my Form 1095-A, Health Insurance Marketplace Statement, and did not include the necessary information about my Marketplace coverage on my return.  I received a letter from the IRS saying I need to reconcile my tax credits using Form 8962. What should I do?

A15. Follow the instructions in the letter from the IRS.  If you do not have a copy of your Form 1095-A, request one from your Marketplace.

Q16.  How do I file an amended return?

A16.  Use Form 1040-X to amend your return.  You can do so by using software, with the assistance of a tax preparer, or by submitting Form1040-X to the IRS. Generally, taxpayers have up to three years from the date they filed their return, or two years from the date they paid the tax, whichever is later, to file an amended return.  You should consider consulting with a tax advisor to determine if you want to file an amended return.  More information about filing an amended return is available on irs.gov.

More Information From ObamaCareFacts.com

If you still have questions you can see our 1095 overview page, our page on filing without a 1095-A, or more information on incorrect filing with an incorrect 1095-A.