ACA Premium Tax Credit: Avoid Common Oversights

This blog post will address a common mistake made during tax filing that can affect your eligibility for the Affordable Care Act (ACA) premium tax credit.

What is the Premium Tax Credit?

The premium tax credit is a subsidy available to low- and middle-income individuals and families who purchase health insurance through the Health Insurance Marketplace. This credit helps reduce the cost of health insurance premiums.

Importance of Reporting ACA Coverage

To receive the premium tax credit, you must report your health insurance coverage on your tax return. TurboTax, a popular tax preparation software, recently reported a glitch that may have caused users to miss this important step.

Consequences of Missing the Reporting Requirement

Failure to report your ACA coverage can result in the IRS revoking your premium tax credit. This can result in substantial additional tax liability.

What to Do If You Made a Mistake

If you realize that you neglected to report your ACA coverage on your tax return, it’s crucial to rectify the error by sending the following forms to the IRS:

Form 1095-A: This form provides information about your health insurance coverage.
Form 8962: This form calculates your premium tax credit.

Submitting the Forms

While the IRS offices are currently closed due to the COVID-19 pandemic, you can still submit your forms by mail. Follow the instructions on the forms and mail them to the address provided.

Estimated Timeline for Processing

Due to the pandemic, the IRS is experiencing longer than usual processing times. It’s important to allow ample time for your forms to be processed.

Seeking Professional Assistance

If you have questions or need assistance with submitting the required forms, consider contacting a licensed insurance agent. They can provide personalized guidance and ensure that your forms are submitted correctly.

Conclusion

Reporting your ACA coverage on your tax return is essential to maintain eligibility for the premium tax credit. If you made a mistake or have any concerns, don’t hesitate to take prompt action to avoid potential tax penalties. By understanding the requirements and taking the necessary steps, you can protect your access to affordable health insurance.