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Questions To Ask NOW Regarding The Affordable Care Act



As an astute navigator of the Internal Revenue Code over the last decade or so I’ve been asked by media heads for my opinions on the Affordable Care Act. Even though I have many to offer the fact of the matter is the deeper I get into the compliance reporting abyss the less sense it seems to make. The following four quotes I can hang my hat:

“For sure the ONLY thing we can rely on, barely, seems to be TITLE 26 and the best place to start your journey in these regards is with the Department of Health & Human Services.”

“The IRS is implementing the tax provisions of Affordable Care Act – and the 2014 filing season is shaping up to be a N-I-G-H-T-M-A-R-E! So be nice to our friends who work in bureaucracy, we are all in this together.”

“Not only is implementing ObamaCare this year is going to administratively suck the life out of most tax practitioners the funny thing about it, and by funny I mean strange, is that it is going to negatively impact the working poor and impoverished the most. The core of the democratic party, they are the ones without the resources to figure this shitty reporting out and are the groups most likely to be penalized the worst.”

“My guess is most taxpayers will simply pay the $95 penalty this year as opposed to having some flunky at one of the tax prep franchise chains charge up to $300 to fill out the mandatory forms.”

With that these are some of the questions you should start asking yourself NOW about ObamaCare.

Regarding the Individual Mandate

Will you receive Form 1095-A, 1095-B, or 1095-C? If yes, Ha Ha. plan on spending up to an extra 8 hours of time for form preparation or up to $300- $400 to get your taxes prepared, signed and filed next year. I’ll blog more about that later, after the IRS actually produces a final draft of the form, stay tuned.

Did you maintain health insurance at any point in the year and if so is there evidence to support that the insurance offered minimum essential coverage? Determine this by reviewing your insurance card or insurance contract. Be honest with your reporting by providing an accurate, consistent and complete review.

Are you entitled to claim dependents and if so were they covered by health insurance at any point in the year? Presuming so be prepared to provide substantiation supporting that the insurance offers adequate minimum essential coverage for them as well.

Did you have any gaps or lack of coverage in the year for you or any dependents longer than 3 months and if so was there more than one gap? Be prepared to explain these gaps.

Might you be exempt during the gap due to the fact that you are part of a recognized religious sect; a health care sharing ministry; an illegal alien; incarcerated; a member of an Indian Tribe; could not afford coverage; qualify for a hardship exemption; have the exemption certificate number (ECN). Tax returns without ECNs are rejected.

Do you have evidence of any exemption? If “Yes” and no exemption applies, calculate the penalty directly using the worksheets in the instructions of Form 8965. If an exemption applies, attach Form 8965.

Regarding the Premium Tax Credit (PTC)

If you are married filing separate, incarcerated, an illegal alien or eligible to be claimed as a dependent generally speaking you are ineligible for the PTC.

If your household income is at least 100% of the federal poverty level (FPL) you do not qualify for the PTC. See exceptions to Form 8962 for those below 100% FPL.

If you eligible for any state or local health benefit program, such as Medicare or Medicaid you do not qualify for the PTC.

If you did not purchase health insurance on the exchange you do not qualify for a PTC.

Were you eligible for health care coverage through an employer or a spouse’s employer and did you enroll? If you did not enroll, did the plan offer minimum value and was affordable? If yes, you do not qualify for a PTC.

Did you receive an advanced PTC (APTC)? If yes, file Form 8962 to reconcile the APTC with the actual credit. You will also need to provide IRS Form 1095-A

Is there more than one tax family sharing the credit? Examples include adult non-dependent children and new divorce or marriage situations. If yes, you must allocate the credit. See Form 8962 instructions.

Are you covered under a policy from the exchange in which someone else holds the policy and if so, do you claim yourself? If both answers are yes, prepare Form 1095-A taking care to allocate the tax credit.

Regarding Businesses

Do you own a business solely or are there other shareholders, partners or employees?

Does your business have 50 or more full-time equivalent employees receiving IRS Form W-2 and if so did the business offer affordable health insurance that provided substantiated minimum value? If not you may be subject to penalties under §4980H. No form is required.

Does the business pay with before tax dollars for individual health costs under a plan as described in IRS Notice 2013-54 with more than one participant. If so file Form 8928 to report the excise tax under §4980D. See Form 8928 instructions for discussion of the reasonable cause exception.

If your business has less than 25 full-time equivalent employees with average wage less than $50,000 and purchased insurance on the SHOP for employees then file Form 8941 as well as the instructions for Form 8941 to determine if you are eligible for a credit.

Original Post By:  John Dundon

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I am enrolled with the United States Treasury Department to practice before the IRS, governed by rules stipulated in United States Treasury Circular 230. As a Federally Authorized Tax Practitioner and a tax appeals specialist my Enrolled Agent License #85353 is issued by the United States Treasury. With this license I work for U.S. taxpayers everywhere to resolve tax matters and de-escalate stress about taxes or tax disputes for individuals and corporations with federal and state issues.

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