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According to Forbes.com, three quarters of Americans will receive the new 1095 B or C health care tax forms this tax filing season. Because of the Affordable Care Act, often referred to as the Obamacare plan, taxpayers will have to use these forms to prove they had the required health care coverage and are not required to pay any penalties this tax season.
What are the new 1095 forms?
The new tax forms are a way for the Internal Revenue Service (IRS) to determine whether or not a person was covered by health insurance during the year. Similar to your W-2, it provides a way for the IRS to match your insurance coverage with your personal tax return to ensure you are not required to pay a penalty for lack of coverage.
Why do the forms vary?
There are three types of forms – Form 1095 A, 1095 B and 1095 C. Depending on where you obtained coverage will determine which form you are likely to receive. Individuals who purchased form the the Marketplace will receive a 1095 A, whereas those who purchased directly from an insurance carrier or obtain coverage through a small employer, will receive form 1095 B. Lastly, if you are covered through an employer who has more than 50 employees or more – a Form 1095 A will be provided for you.
When can you expect to receive the forms?
In most cases, the forms are due by March 31st. However, if a taxpayer has yet to receive this form, they should make contact with their insurance company or employer. If you obtain coverage through the Marketplace, you should be able to obtain your form online.
What should taxpayers do with the tax forms?
For certain cases, you will need to use the information that is provided on the 1095 to determine whether or not you qualify for a premium tax credit. The premium tax credit is a refundable credit designed to help low or moderate individuals and families to afford the health care insurance purchased through the Marketplace. At tax time, the information is reconciled with premiums paid throughout the year with the qualified tax credit to determine whether one qualifies for a refundable premium tax credit or not.
In other cases, you may simply just file the form away with your important tax documents. Note, you are not required to submit the form with your tax return.For more information, visit healthcare.gov.
Kemberley Washington is a certified public accountant, professor at Dillard University and author of The Ten Commandments to a Financial Healing and Are you wearing the B.A.D.G.E. (r) Financial Planner.