IRS says file tax return with incorrect 1095-A and amend the return later.
In updated Frequently Asked Questions regarding the ACA Premium Tax Credits and federal tax returns, the IRS says tax payers can file with what they know are bad 1095-As issued by Covered California. The tax payer will then have the option to file an amended tax return if they are entitled to a larger refunded under the corrected 1095-A they may receive.
Taxpayers who have not yet filed their 2014 income tax return
Q4. I received a Form 1095-A, Health Insurance Marketplace Statement, but I have not filed my income tax return. The Marketplace notified me that it would issue me a corrected Form 1095-A, but I have not yet received it. What should I do?
A4. If you have not yet filed your income tax return you should file by April 15 using either the Form 1095-A that you have received or the corrected form, if available. If you file based on this original Form 1095-A, you will not need to amend your income tax return when you receive the corrected Forms 1095-A. Nonetheless, you may choose to file an amended return. Alternatively, you may also file for an extension of time to file. See question 16 for additional information about filing an amended return.
Covered California 1095-A
Covered California issued a news release apologizing for the distress that consumers are experiencing with either an incorrect 1095-A or none at all.
Although most consumers received a correct 1095-A form on time, some Covered California consumers have not received a correct 1095-A or have concerns about the form they received. We are very sorry for the inconvenience and we know it is frustrating given the upcoming April 15 tax filing deadline. We are working diligently to ensure every Covered California consumer receives a corrected 1095-A form as soon as possible. For those who have filed a dispute regarding an incorrect 1095-A form or for not having received a 1095-A form, Covered California is working to resolve disputes as quickly as possible. More guidance will be offered as we approach the April 15 tax deadline.
Below is a copy of the IRS FAQs on the 1095-A issue
Question 1: What relief was announced on March 20, 2015?
Answer 1: On March 20, in light of CMS’s announcement of additional incorrect information on certain Marketplace tax statements (Forms 1095-A), the Department of the Treasury expanded the relief it announced previously on February 24. If you were enrolled in qualifying Marketplace coverage, filed your return using information from your Form 1095-A, Health Insurance Marketplace Statement, and you later learn that the information on that form was incorrect, you do not need to file an amended return. This is true even if additional taxes would be owed based on the new information. Under the relief provided, the IRS will not pursue the collection of any additional taxes from you based on updated information in the corrected form. This relief applies to tax filers who enrolled through the Federally-facilitated Marketplace or a State-based Marketplace. Even though you are not required to file an amended tax return, some taxpayers may choose to do so if the updated information is in their favor. You may want to consider consulting with a tax preparer to determine if you want to file an amended return.
Question 2: What additional relief is being announced?
Answer 2: In light of some tax filers not receiving their correct Forms 1095-A, Health Insurance Marketplace Statement, in time, the Treasury Department and IRS plan to release guidance providing penalty relief for individuals who are unable to file an accurate return by April 15. Generally, in order to qualify for this relief, taxpayers must file either Form 1040 (series) or Form 4868 (requesting an automatic extension) by April 15. A return must be filed by Oct. 15. More specifics on the relief will be included in the upcoming guidance.
Question 3 How will I know if my Form 1095-A is wrong or delayed?
Answer 3: If you received your coverage through a Marketplace, you may have received an incorrect Form 1095-A, Health Insurance Marketplace Statement, or your form may have been delayed. If you are affected, the Marketplace will notify you by email, phone, or through your Marketplace account. The Marketplaces have been notifying individuals who are affected by these additional errors. If you identify errors on your own have questions about your form, reach out to the Federally-facilitated Marketplace call center at 1-800-318-2596 or your State-based Marketplace.
Taxpayers who have not yet filed their 2014 income tax return
Q4. I received a Form 1095-A, Health Insurance Marketplace Statement, but I have not filed my income tax return. The Marketplace notified me that it would issue me a corrected Form 1095-A, but I have not yet received it. What should I do?
A4. If you have not yet filed your income tax return you should file by April 15 using either the Form 1095-A that you have received or the corrected form, if available. If you file based on this original Form 1095-A, you will not need to amend your income tax return when you receive the corrected Forms 1095-A. Nonetheless, you may choose to file an amended return. Alternatively, you may also file for an extension of time to file. See question 16 for additional information about filing an amended return.
Q5. I received a Form 1095-A, Health Insurance Marketplace Statement, but I have not filed my income tax return. The Marketplace notified me that the Form 1095-A was issued to me in error and should be disregarded. What should I do?
A5. If you were told to disregard a Form 1095-A, you should file your tax return by April 15 and should not include information from that 1095-A on your return. The premium tax credit is available only for eligible taxpayers who enrolled in qualifying Marketplace coverage. If you never paid premiums for your coverage then you were not enrolled in coverage. In addition, stand-alone dental plans and catastrophic plans do not qualify for the premium tax credit.
Q6. I noticed an error on my Form 1095-A, Health Insurance Marketplace Statement, and called my Marketplace. My Marketplace is currently reviewing the issue and informed me that they may be issuing a corrected Form 1095-A, but I have not heard back. I did not yet file my income tax return. What should I do?
A6. If you have not yet filed your income tax return you should file by April 15 using either the Form 1095-A that you have received or the corrected form, if available. If you file based on this original Form 1095-A, you will not need to amend your income tax return when you receive the corrected Form 1095-A. Nonetheless, you may choose to file an amended return. Alternatively, you may file for an extension of time to file. See question 8 for additional information about requesting an extension.
Q7. I noticed an error on my Form 1095-A, Health Insurance Marketplace Statement, and have not yet called my Marketplace. What should I do?
A7. If you believe there may be an error on your Form 1095-A, you should contact your Marketplace about your concerns. However, it is uncertain when the issue will be resolved. If you have not yet filed your income tax return, you should file by April 15 using either the Form 1095-A that you have received or the corrected form, if available. If you file based on this original Form 1095-A, you will not need to amend your income tax return when you receive the corrected Form 1095-A. Alternatively, you may file for an extension of time to file. See question 8 for additional information about requesting an extension.
Q8. I purchased qualifying Marketplace coverage, and advance payments of the premium tax credit were made to an insurance provider on my behalf. I have not received a Form 1095-A, Health Insurance Marketplace Statement, and have not yet filed my income tax return. Should I wait to file my return until I receive a Form 1095-A?
A8. If you have not yet filed your income tax return, you should file Form 4868 (request for an automatic extension) by April 15. Then, once you receive your Form 1095-A, you should file your tax return using the information from the form. Please note that if you file a Form 4868, you have an extended time to file, but not an extension to pay any tax you owe. Form 4868 provides further information. Form 4868 is available on IRS.gov, through tax software or from a tax professional. Of course, if you receive your Form 1095-A before April 15 and are able to file using the form, you are encouraged to do so.
Q9. I purchased qualifying Marketplace coverage, and advance payments of the premium tax credit were made to an insurance provider on my behalf. I just got my Form 1095-A, Health Insurance Marketplace Statement, and cannot file by April 15. What should I do?
A9.If you cannot file your income tax return by April 15, you should file Form 4868 (request for an automatic extension) by April 15. Then, as soon as you can, you should file your tax return, using the information from your Form 1095-A. Please note that if you file a Form 4868, you have an extended time to file, but not an extension to pay any tax you owe. Form 4868 provides further information. Form 4868 is available on IRS.gov, through tax software or from a tax professional.
Q10. I purchased qualifying Marketplace coverage and advance payments of the premium tax credit were made to an insurance provider on my behalf. I did not receive a Form 1095-A, Health Insurance Marketplace Statement, or received my Form 1095-A late, and therefore was unable to file my income tax return by April 15. I filed a Form 4868 for a six-month extension and made a payment with that form. When I get my Form 1095-A and file my income tax return, will I be subject to penalties for paying my income taxes late?
A10. No. You are considered to have reasonable cause for the period covered by this automatic extension if you paid at least 90 percent of the taxes you owed for 2014 before the regular due date. This can be paid through withholding, estimated tax payments, or payments made with Form 4868. Most taxpayers in this circumstance will qualify for reasonable cause. If you do not meet these requirements for reasonable cause, Treasury and IRS intend to provide additional penalty relief for taxpayers who received a delayed Form 1095-A or a Form 1095-A that they believed to be incorrect and consequently were unable to pay the taxes they owed by April 15.
Taxpayers who have filed their 2014 return
Q11. I enrolled in qualifying Marketplace coverage, received a Form 1095-A, Health Insurance Marketplace Statement, and filed my federal income tax return using this Form 1095-A. I received a notice that the Form 1095-A I used had incorrect information. Do I need to file an amended return?
A11. No. If you enrolled in qualifying Marketplace coverage, received a Form 1095-A, and filed your tax return based on that form, you do not need to file an amended return based on your corrected Form 1095-A. This is true even if additional taxes would be owed based on the new information. Nonetheless, you may choose to file an amended return. You should consider consulting with a tax advisor to determine if you want to file an amended return.
Q12. The information in my corrected Form 1095-A, Health Insurance Marketplace Statement, would cause my federal income tax payment to decrease or my refund to increase. Can I file an amended return since this change is in my favor?
A12. Yes. In some cases, the information on the corrected Form 1095-A may be in your favor – it may decrease the amount of taxes you owe or increase your refund. Taxpayers have the option of filing an amended return if they choose. Generally, taxpayers have up to three years from the date they filed their return, or two years from the date they paid the tax, whichever is later, to file an amended return. You should consider consulting with a tax advisor to determine if you want to file an amended return.
Q13. I received a Form 1095-A, Health Insurance Marketplace Statement, which I used to file my income tax return and claim the premium tax credit. After I filed, the Marketplace notified me that the Form 1095-A was issued in error because I never completed enrollment or because the Form 1095-A was incorrectly issued for coverage that does not qualify for the premium tax credit. Should I file an amended return?
A13. Yes, you should file an amended return. The premium tax credit is available only for eligible taxpayers who enrolled in qualifying Marketplace coverage. If you never paid premiums for your coverage then you were not enrolled in coverage. In addition, stand-alone dental plans and catastrophic plans do not qualify for the premium tax credit. If you filed and incorrectly claimed a premium tax credit based on these forms, and you do not amend your return, the IRS may contact you about additional tax due.
Q14. I purchased qualifying Marketplace coverage, and advance payments of the premium tax credit were made to an insurance provider on my behalf. I filed without receiving my Form 1095-A, Health Insurance Marketplace Statement, and did not include that information when I filed my taxes. Should I file an amended return?
A14. Yes, you should file an amended return. You are required to reconcile advance payments of the premium tax credit made to your insurer on your behalf through the Marketplace to ensure you receive the correct amount of tax credits. You agreed to this process when you enrolled in the Marketplace. If you filed an income tax return and failed to reconcile your credits, you should file an amended return, using the information on your Form 1095-A. If you do not have a copy of your Form 1095-A, reach out to the Federally-facilitated Marketplace call center at 1-800-318-2596 or your State-based Marketplace. See question 16 for additional information about filing an amended return.
Q15. I purchased qualifying Marketplace coverage, and advance payments of the premium tax credit were made to an insurance provider on my behalf. I filed without receiving my Form 1095-A, Health Insurance Marketplace Statement, and did not include the necessary information about my Marketplace coverage on my return. I received a letter from the IRS saying I need to reconcile my tax credits using Form 8962. What should I do?
A15. Follow the instructions in the letter from the IRS. If you do not have a copy of your Form 1095-A, request one from your Marketplace.
Q16. How do I file an amended return?
A16. Use Form 1040-X to amend your return. You can do so by using software, with the assistance of a tax preparer, or by submitting Form1040-X to the IRS. Generally, taxpayers have up to three years from the date they filed their return, or two years from the date they paid the tax, whichever is later, to file an amended return. You should consider consulting with a tax advisor to determine if you want to file an amended return. More information about filing an amended return is available on irs.gov.
Covered California News Brief on IRS 1095-A Guidance
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