10 Simple Obamacare Tax Tips for 2016
There are a few taxes related to ObamaCare that require the attention of most tax paying Americans. Below we review the most important tax tips for 2016.
In a nutshell, you’ll likely want to:
- Have your 1095 form filed on your behalf (by your insurer, employer, or the Marketplace) on hand.
- Get Form 8962, Premium Tax Credit (PTC)
- Get Form 8965, Health Coverage Exemptions (the instructions include the worksheet for paying the fee, learn more here: the Shared Responsibility Payment, including line-by-line calculations).
- Get Form 1040
You may also need Second Lowest Cost Silver Plan (SLCSP) Tax Tool, Health Savings Accounts info, Federal Poverty Guideline info, and Modified Adjusted Gross Income. There are more forms that could be needed, get the full breakdown of all our tax tips and all the forms here.
NOTE: Nothing on this page should be taken is professional tax advice.
For professional tax advice:
- You can also use the IRS Tax Help Line for help: (800) 829-1040
- If you make less than $60,000 a year, you can use the IRS’ Free File option.
- If you make less than $53,000 a year, you can use the IRS’ free Volunteer Income Tax Assistance program.
- The IRS’ Tax Counseling for the Elderly program is free for those 60 and over.
- Enroll America will offer no-cost local help using Intuit TurboTax.
- You can use any major tax assistance software.
Top 10 Tax Tips for the Affordable Care Act for 2016 Tax Season (2015 coverage)
- Don’t panic over your 1095. You can’t self file a 1095 as a general rule. If you have marketplace coverage, it’ll help you to claim tax credits and exemptions. If you didn’t the form doesn’t do much of anything. Since it’s someone else’s job to file the form, there isn’t much you can do. If you need to follow up with the form try healthcare.gov and then try the IRS.
- Line 61 of your 1040 requires you to attest that you had “minimum essential coverage” or an exemption for each month of the calendar year (if you were above the tax filing threshold).
- All tax credits, many exemptions, and more are all based on household income compared to the Federal Poverty Level. That is the Modified Adjusted Gross Income (MAGI) of the head of household and spouse, and the Adjusted Gross Income (AGI) of tax dependents as compared to family size.
- You only need to “pay the fee” for months you are a TAX dependent didn’t have coverage or an exemption. You can’t get tax credits for someone who isn’t in your “tax family”. Your “coverage family” should only include those in your “tax family”. This means you’ll owe the fee for anyone you claim if they didn’t have coverage or an exemption for at least one month.
- Many people will have missed a full month of coverage, or will want to file taxes despite being below the tax filing limit, or had coverage options that were “not affordable”, or will have been out of the country. There are over 20 exemptions to take that replace having coverage for one or more months. All exemptions are taken on form 8965. So unless you had coverage for at least one day every month of the year, you need to file 8965.
- Some exemptions need an ECN number. The 8965 instructions explain this. In some cases you will need to apply to the marketplace for an ECN. If your ECN is pending, just write pending on the 8965 form instead of the ECN.
- If you got tax credits you must adjust your tax credits on form 8962.
- If you estimated too much household income, and claimed too many advanced tax credits, you may owe back money on 8962 (based on income). Luckily, this also works the other way around. If you had a marketplace plan you can also claim the full amount of tax credits you are owed based on your actual income. So if you didn’t claim the full amount, or even if you did, file 8962 if you got tax credits.
- If you didn’t use an HSA last year, consider one this year. As you’ll see when you fill out the related form, it can actually drop your household income and save you tax money.
- Double check “free file” options. Whether it’s those for-profit tax company with a free product, the local tax people, or the IRS free file, you may want to double check the work yourself. Getting the ACA related forms even a little wrong can mean less money in your pocket.
BEWARE – if you take money from a 401K to pay medical costs, it will count as income and put you over the edge for a subsidized plan – at tax time you will need to refund your subsidy. How is this fair????
Good call, this is true. If you take out income you need to pay taxes on it and thus it counts. Both a roth and traditional 401k have different rules pertaining to how they affect MAGI.
Can I claim my mother on my taxes if she has had Obamacare?
Does anyone know if international people can obtain a medical insurance ? actually, I have to find an insurance in USA because I am supposed to go there soon and I need to find a medical insurance to fill my application.
You would want to get traveler’s insurance most likely, if you are going to be here for an extended stay, or on work, then you may have other options. A direct call to a company like BCBS or United Healthcare is probably a good simple step.
I don’t agree with the tax penalty. I recently changed jobs. I won’t have health insurance because my portion of the employer offered insurance is over $400 a month. Cobra from my old job is about the same. It’s a choice of not have health insurance or be homeless because I can’t pay my property taxes if I have health insurance.
my daughter in law has Obama care..and has been taxed $10,000.00 …WHY??? My son is a veteran US ARMY..
The senior tax prep people messed my taxes up horribly for 2015. They were redone 3 times and were still not right. Is there a tax tool that will do the form 8962 for me?
I’m not sure. The form isn’t simple, but it also isn’t impossible to power through on your own. I have a whole series of thoughts on the complexity of taxes, but no specific answer outside of seeking assistance (some of which is free, such as via the IRS helpline).
FOR 2017: WHAT IS THE FPL FOR A FAMILY OF THREE?
AM I CORRECT IN ASSUMING THAT ABOVE 1.38 TIMES THAT NUMBER WILL MAKE YOU ELIGIBLE FOR A PREMIUM CREDIT ON AN ACA HEALTHCARE PLAN?
This page describes everything you could ever want to know and more about the Federal Poverty Level. https://obamacarefacts.com/federal-poverty-level/
100% for 3 is $20,160 (that is the 2016 table which is used for 2017 coverage).
In 2016, I claimed only a small retirement pension and because of it and being part Native American, I received subsidies to assist me in obtaining a healthcare plan. I had NO idea that when I received some money Feb. 28, 2017 and my tax preparer used this money to add it to my 2016 income, I now have to pay back all the subsidies. My question is, because this money made my income for 2016 too high to have received subsidies, do I now have to pay the insurance company a deductible and co-pays for medical services for year 2016? Thank you.
If I claim my daughter (an adult who hasn’t been working-going to school two nights a week) as a dependent on 2016 taxes and she does not have health insurance how much is the penalty?
It depends on your income and her income. Here is how the rule has worked in passed years. https://obamacarefacts.com/obamacare-individual-mandate/