Some people are getting more tax forms due to Obamacare, but requirements for filing your taxes have not changed.
This tax season, the Obama administration required businesses to send out forms to employees who may have gaps in their insurance coverage. The forms are intended to show the taxpayer what coverage they had throughout the year and do not have to be submitted in their tax return.
But some taxpayers received them late in the tax filing season, which started in January and ends next month, as the administration offered the private sector more time to get the forms together, administration officials told reporters during a call Friday.
“What this form does is address situations where taxpayers have complex arrangements over the course of the year,” said Kevin Counihan, CEO of healthcare.gov, used by 38 states and the District of Columbia to sign up for Obamacare.
For instance, if an employee switched jobs, the form details that change in insurance coverage from the old job to the new one.
The officials said that even though the forms may arrive late, they are not needed to turn in the tax returns, which are due by April 15.
For most people who get their insurance through their work, they have to check a box on their tax return affirming they have insurance.
Obamacare doles out subsidies in two ways. The first is through an advance tax credit that you get when you sign up for Obamacare, and the second is a tax credit received when you file your tax return.
The advance tax credit is based on income filings that you make when you enroll in Obamacare.
If your income changes from the time you get the credit to when you file your taxes, like when you get a higher-paying job, then you have to report that change to the Internal Revenue Service and reconcile that income with the income you reported when you received the tax credit.
If your income is more at the end of the year, you may have to pay the IRS additional money.
The IRS in January said that during the 2014 tax season 4.6 million people needed to reconcile advanced tax credits. Nearly 1 million filed a tax return but didn’t reconcile their payments.
In addition in 2014, nearly 8 million taxpayers had to pay $1.6 billion to the federal government for the individual mandate penalty for not having health insurance.
“Payments were generally relatively small, with the average payment around $210,” according to a January letter from IRS Commissioner John Koskinen to Congress.
The Obamacare penalty rose substantially in 2015 to about $325 per person or 2 percent of household income, whichever amount is highest.
Last year, the administration sent a botched tax form to 820,000 Obamacare customers. The form had an incorrect box that resulted in inaccurate calculations for the amount of subsidies the Obamacare enrollee was supposed to receive.
Of the 820,000 people who received the botched form, about 50,000 had already filed their tax returns. The Treasury Department said those people wouldn’t have had to pay the money back if they received too much in subsidies.
About 12.7 million people signed up for Obamacare during the latest open enrollment period.
