The Treasury Department and the Department of Health and Human Services are mobilizing to ease the tax filing burden for taxpayers who are now facing additional paperwork related to the Affordable Care Act. But some accountants still see cause for concern this tax season.
The two agencies released statements on Thursday highlighting the new changes to the tax filing process, as now filers will have to report whether they had health care coverage in 2014 and whether they received tax credits to help buy insurance. Tools for filers will be forthcoming, and the administration will be working with top tax preparers and community organizations to keep filers in the loop. There will also be direct outreach to people who bought coverage on the exchanges.
“We are working to ensure that whatever their experience, consumers can easily access clear information since this is the first year they will see certain changes to their tax returns,” noted Treasury secretary Jacob J. Lew in a
written statement.
More than 75% of filers will merely have to check a box and say they have coverage, according to Treasury and HHS. Still, filing will be
more cumbersome for individuals who purchased coverage through the insurance marketplaces or who chose not to obtain coverage.
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Indeed, accountants have said that a number of clients who've purchased their coverage via the marketplace could face additional costs when they file in April. This is because filers will have to
reconcile their actual income for 2014 versus the estimate they had provided last year when they signed up for insurance coverage and subsidies.
This means if they earned more money than they had guessed in 2014, they will be on the hook to repay those subsidies.
Treasury and the HHS on Thursday told taxpayers who bought coverage on the insurance exchanges to watch the mail for a new form they'll need for their taxes — Form 1095-A — in order to reconcile their financial assistance.
The concern among accountants, however, is that filers won't receive their Form 1095-A in a timely fashion.
“With any new program with the government, the forms might not come out until the beginning of April, and then you have 15 days to file for anyone who went to the exchange,” said Ted Sarenski, a certified public accountant, personal financial specialist and CEO of Blue Ocean Strategic Capital.
In a pinch, however, if the form fails to arrive in a timely fashion, clients will need to bring to their accountants any information that they used when they first applied for health care coverage under the ACA. “The tax preparer could work out pretty close to what the numbers should be and have an idea of that person's tax situation until they get the final data,” Mr. Sarenski said.
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Another worry is that filers won't know to look for the form and it will get discarded. “If someone comes in and says, 'I bought insurance on the exchange and I was covered the whole year,' and I ask for Form 1095-A and they say, 'What?'” said Barry C. Picker, an accountant at Picker & Auerbach. “Those are situations that I envision as problematic.”
“I just hope that when people get these forms and it says 'tax document,' they don't throw it out,” he added.
HHS also said that it would launch tools to make the filing process easier for tax filers who either purchased coverage through the marketplace, seek an exemption or seek information on the penalties that await those who don't buy coverage and aren't exempt from doing so. The IRS currently has a walkthrough on
calculating those penalties.
