The Affordable Care Act and Your Tax Return

The ACA has changed the landscape of healthcare.  As 2016 rolls in, many of the provisions of the legislation are now in full effect.  What changes can we expect as we start this year’s tax preparations?

Advance Tax Credit.  Those who purchased health insurance through the new Marketplace may have received the Advance Premium Tax Credit to help lower the cost of their coverage. The amount of credit you receive is based on your estimated income. When you file your taxes, the credit you received based on your estimated income must be reconciled with your actual income. If your income is substantially different from the estimate, then you may owe a penalty or be due an additional credit.

Penalties.  Many taxpayers were surprised in 2015 to find that there were tax penalties for not having health coverage. 2016 will be no different. In fact, starting this year many of the penalties for lack of coverage will increase, unless you qualify for one of several exemptions. 

Form 1095-A.  If you enrolled in health care coverage through the marketplace, you’ll be receiving a tax form in the mail called a 1095-A.  Make sure to keep this form with other tax records like your W-2’s, as you won’t be able to complete your 2015 return without it.

For other questions on how the provisions of the ACA will affect you this year, please consult your tax professional.