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how to address your income when on ACA for 3 mo due to unemployment and estimated based on YTD, but dropped ACA once employed?

We were on obamacare insurance for 3 consecutive months in 2014 (apr - june) due to unemployment. when signed up, we were told to give our income as of that point in the year due to not knowing of when/if new employment would come. We paid premiums based on income through June. Employment was gained and we dropped obamacare due to having employer insurance - we called in June and updated information with marketplace of new income, employment, etc. as instructed. We cancelled insurance and started July 1st with employer insurance. Now at tax time, they are using our entire income for the year to say we did not qualify for the marketplace insurance and need to repay all the $3,000 premium credit because we made too much money with my husbands new job he obtained. However, the insurance was not used when we had employment and we were told our income that the credit would have been based on would be what we had made for the entire year up till the point we cancelled marketplace insurance. Help! Marketplace and IRS have both stated they have yet to be trained on how to handle this situation.
Obamacare Obamacare Tax Penalities Obamacare Affordable Care Act
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Tax Professional Answers

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Kathryn Morgan
Unfortunately at this point the IRS and the Marketplace people you spoke with are correct. They, nor most tax pros have been given any direction in situations like yours. The IRS just last week released Pub 974 which is supposed to have addressed some of these issues, but didn't do a very good job of it. According to the IRS there are several things in the works to be published soon to give more concrete guidance. Mat this point your options are to file the return as is, repay the credit and then amend when the clarifications come out or file an extension by 15 April and pay any balance due you have less the repayment. The IRS has said they will forgive penalties and interest on unpaid repayments until clarification is released.
Leave a Comment 171 weeks ago

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Question Owner
Thank you Kathryn. Please keep me posted if any more updates and clarifications come forward on this issue. I read Pub 974 and found some hope but no clear answers. Thanks for your help...continued insight and guidance appreciated.
Reply 168 weeks ago

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