The tax season is almost here and many of you are probably wondering if you need to report your healthcare for this upcoming season. Last tax season the IRS ended up not rejecting the silent returns. However, that doesn’t seem to be the case for this year.
What was a ‘silent return’?
First, you may be wondering what a ‘silent return’ is. Well, it is a tax return where an individual didn’t provide information on whether they had health insurance for 2016.
However, for the 2017 tax season, if you were an individual who submitted a silent return, you will not be able to do so this year. For the upcoming tax season, the IRS will not consider a return complete if it doesn’t indicate if the individual had a form of coverage. With the individual shared responsibility provision, taxpayers are required to do at least one of the following:
- Have qualifying healthcare coverage called minimum essential coverage
- Qualify for a healthcare coverage exemption
- Make a shared responsibility payment with their federal income tax return for the months that are without coverage or an exemption.
What if you do not have full-year coverage?
If you do not have full-year coverage but have an exemption or will need to make a shared responsibility payment, here is some information you need to know:
Health Care Exemption
If you’re filing with a health care exemption, you will need to file Form 8965 with your tax return. If there are months throughout the year where you don’t qualify for a coverage exemption, you’ll need to show that you had minimum essential coverage or you will need to make a shared responsibility payment. You can be exempt only if you meet one of the following:
- The lowest-cost coverage available through marketplace is considered unaffordable.
- You have a gap in your coverage that’s less than 3 months in a row.
- You qualify for an exemption for one of several other reasons. This includes having a hardship that prevents you from obtaining coverage, or belonging to a group specifically exempt from the coverage requirement.
Shared Responsibility Payment
You will be required to make a shared responsibility payment if you do not have the minimum essential coverage and don’t qualify for a coverage exemption for any month during the tax year. You must report the payment in the “Other Taxes” section on Form 1040 and Form 1040A and 1040EZ as well. The annual payment is the greater of either 2.5% percentage of your household income or a flat dollar amount. It is capped at the national average premium for what the bronze level of health insurance is through the Marketplace. To determine how much you will pay, you can find the instructions on Form 8965, Health Coverage Exemptions. Or, give us a call at A. Mazzo Accounting and we can help you determine what your payment will be.
If you didn’t have a full-year health coverage, it is a smart idea to determine now if you will be exempt or how much your shared responsibility payment will be so that you are prepared for the upcoming tax season.
Resource: https://www.irs.gov/affordable-care-act/individuals-and-families/individual-shared-responsibility-provision
A Mazzo Accounting provides a variety of tax and accounting services to individuals and businesses in the Wyomissing, Reading, West Reading, Sinking Spring and Kenhorst areas, as well as towns and villages around the Greater Reading area. Our services for small to mid-size businesses include taxes, payroll services, accounting services, and bookkeeping services. We also provide a variety of services for individuals and they include tax return preparation as well as some accounting assistance.
