ElectroFile Income Tax Service   Income Tax Service
5200 W Market St
Greensboro, NC 27409
  Terry Hough, President Terry Hough

December 29, 2014

The Affordable Care Act (ACA) and its Possible Effects on You and Your Tax Return

We know you have a choice when choosing a tax professional, and we want to thank you for your business!

We wanted inform you how the Affordable Care Act (ACA), sometimes also referred to as Obamacare, may impact all of us this tax season. The ACA created the new Premium Tax Credit and the Individual Responsibility Payment that may affect your tax return this season.

More Complex Tax Returns
The entire filing process will be more complicated this year, with every tax return to now include new provisions related to health insurance. This year, many taxpayer returns will contain additional forms related to health care coverage. Tax returns will be more complicated and will take more time and expertise to complete.

Possible Reduced Refunds
The new Individual Responsibility Payment will be assessed by the IRS against taxpayers who do not indicate on their return that they either had health care coverage throughout 2014, and do not qualify for an exemption from the health care coverage requirement. This new payment amount is collected by the IRS as part of the new ACA law starting with 2014 returns. As a result, if the IRS subjects you to this payment amount, your refund may be less than you expected, or less than you received in past years.

Additionally, the IRS may adjust your refund (either up or down) if you currently receive health insurance through the Marketplace (sometimes also referred to as Obamacare) but the IRS determines that the information on file at the Marketplace is incorrect.

Who is Affected?
All taxpayers across the country are subject to the requirements of new ACA law. The federal government urges all consumers receiving coverage through the their federal or state Marketplace to report "life changes" that can affect their coverage as soon as the changes take place (such as changes in marital status, income, number of dependents, where you live, or disability status). The government urges you to report these changes so that insurance adjustments can be made immediately and tax refunds not affected as much.

Watch for New Tax Documents.
You are accustomed to receiving various forms that are necessary to prepare your return. Some of these are Form (s) W2, Form(s) 1099-INT, Form(s) 1099-B, Form(s) 1098, and Form(s) SSA-1099. Many of these are due to be received by January 31st, but can be as late as February 15th.

For 2014 filing, you should also receive a Form 1099-A (or possibly a Form 1099-B or 1099-C) that provides information about your insurance coverage. These important tax documents will be sent to you by your health insurance provider. Include these forms in your tax information that you submit to your tax professional for your tax preparation. They are necessary to accurately prepare your 2014 tax return.

Information about Members of Your Household.
To complete the ACA filing requirements on your 2014 tax return, information about all members of your household and their income, whether or not you claim them as a dependent, will be required. The requirement for this information goes far beyond any thing we have seen in the past. Your tax professional may need to see (or prepare) the tax returns for all members of your household who have 2014 income. So, make sure your children (including college students) with earnings, parents, and other members of the household who have income can provide the information to accurately prepare your (and their) tax return.

Your Tax Professional's Assistance
Now, more than ever, it benefits you to have the assistance of a tax professional familiar with the changes, laws, and tax forms associated with ACA. Your ElectroFile Tax Professional is here to assist you with the proper tax forms and with questions and problems that may arise.