The 2015 tax return season is here. Most taxpayers will file their 2014 tax returns and pay any tax due by April 15, 2015. The biggest change for this year’s tax returns is that you will report your health insurance on your federal return, and claim or reconcile any premium tax credit. Here’s a rundown of what’s new for your 2014 tax year returns.
New This Year - Healthcare Coverage Reporting
2015 is the first year you will have to prove you had qualifying health coverage (“minimum essential coverage”) for the previous year (2014). This happens when you file your 2014 taxes.
If you had qualifying health insurance coverage for the whole year, you will simply check a box on your tax return.
Additionally, you should get a notice from your insurance provider by January 31, 2015 to use with your taxes, describing your coverage status during the previous year.
You May Pay a Fee if You Didn’t Have Healthcare Coverage
Also new this year on your taxes is if you didn’t have coverage in 2014 and you don’t qualify for an exemption (discussed next), then you will pay a fee (aka the Individual Shared Responsibility Fee).
For your 2014 tax return, you will pay the greater of two amounts:
$95 for each adult and $47.50 for each child, up to $285 per family, or
1% of family income minus the federal tax filing threshold. The federal tax filing threshold is $10,150 for a person who files singly, $20,300 for somebody who files jointly.
Also, the fee is calculated based on “coverage months.” This means that each month you are uninsured, you may owe 1/12th of the annual fine. However, short spells of being uninsured may not be subject to a fee.
Exemptions to the Fee
You may be eligible to claim an exemption from the requirement to have health insurance coverage.
If you are eligible for an exemption, you will complete the new IRS Form 8965, Health Coverage Exemptions, and attach it to your tax return. Some exemptions you must apply for directly through the Health Insurance Marketplace, however, most of the exemptions are easily obtained from the IRS when filing a return.
New This Year - Reconciling Your Premium Tax Credit
Also new this year on you 2014 tax returns, is if you received (or are applying for) a premium tax credit, you will need to fill out form Form 8962 using the information you received from the Marketplace on Form 1095-A. You will receive Form 1095-A, Health Insurance Marketplace Statement, from the Marketplace by early February.
To summarize, if you received an advanced premium tax credit or are applying for a premium tax credit at tax-time, you will:
Receive Form 1095-A in the Mail. Form 1095-A includes the information you need to complete Form 8962 - Premium Tax Credit (PTC).
File Form 8962 With Your Federal Tax Return. The form uses this information to reconcile the amount of your premium tax credit you’re eligible for with any advanced premium tax credit you received.
If your actual income was lower than you estimated when you applied for health insurance, you may have received too little in advanced premium tax credits. Form 8962 will identify this, and you would be owed a tax refund.
If your actual income was higher than estimated when you applied for health insurance, you may have received too much in advanced premium tax credits. In this case, you will generally have to pay some or all of it back.
New This Year - Standard Deductions
There are a variety of credits and deductions for individual and business taxpayers. In addition to the standard deduction for individuals, common deductions include home mortgage interest, state and local tax, and charitable contributions. Many business expenses are deductible as well.
For the 2014 standard deduction amounts are:
Head of Household: $9,100
Married Filing Jointly: $12,400
Married Filing Separately: $6,200
Qualifying Widow/Widower: $12,400
For a full list of deductions and credits for individuals and small businesses, visit www.irs.gov.