Important! ACA and 2017 Tax Returns

For tax year 2016, taxpayers had an option to file a return opting not to report the health coverage information that is used to show compliance or calculate health coverage penalties ("Individual responsibility payment"). That option is going away for tax year 2017 returns which will be filed in 2018. The IRS announced that returns not reporting the information will not be able to be e-filed, and paper-filed returns that leave it out could be delayed until the information is provided.

The penalties were scheduled to increase again this year, and they can be severe. Be aware also that those who receive a premium tax credit (PTC) advance to help pay for exchange purchased policies may have to pay some or all of that advance back if in fact they do not qualify for the PTC. I have seen a number of these scenarios the last couple years that surprised people. For example, lets say you got marketplace policy and they anticipated you would qualify for a PTC of $1200 for the year. They issue an "advance" that pays part of your premium, and you are paying $400 a month. Your premium is actually $500 a month, and you are borrowing $100 a month from the US Treasury that is being applied against your premium. If at filing time because of income you don't actually qualify for the PTC, you have to pay the $1200 back.

There are certain exemptions allowed that would eliminate penalty. These include short coverage gaps between coverage of two months or less, low income exemption, being a member of a cost sharing ministry, being a member of certain religious sects, living abroad, and unaffordable coverage to name a few. In the event of unaffordable coverage, you must be aware that this is a Marketplace exemption that must be granted ahead of filing time. You cannot simply base this on the cost of premiums you have shopped.

ACA is up in the air in Congress still, but as of this time the law stands as is and the IRS sets the reporting requirements. If you have any questions, please feel free to call for clarification on your situation.

In your corner,