MISTAKE #6: Forgetting About Form 1095-A
Top Tax Return Mistakes Made By Self Preparers
When a taxpayer enrolls in health insurance through Healthcare.gov or a state health insurance exchange, they'll receive Form 1095-A, a Health Insurance Marketplace Statement. All of their health insurance costs and coverage are reported on the 1095-A, along with any Affordable Health Act subsidies that they received.
At the end of the year, they need to submit Form 8962 to
reconcile that credit with their actual income. If they underestimated their
income, they might need to pay some of that healthcare subsidy back. If they
overestimated their income, they might be entitled to more of a credit. That
calculation occurs on Form 8962.
If you received an insurance subsidy through the health insurance
marketplace and do not file Form 8962, then the IRS will demand that you send
Form 8962 to them. They’ll delay your refund until you send it, too. Form 8962
isn’t too hard to fill out with the help of tax preparation software – but if
you forget to report your subsidy and then try to do Form 8962 by hand, it can
be a difficult form to complete.
The good news is that the IRS E-filing system is finally catching up with this problem. In 2022, the IRS started rejecting returns that are missing Form 1095-A.
There are many taxpayers who purchased health insurance through the
marketplace, but did not receive the Advance Premium Tax Credit. Some of them
are eligible for that subsidy and could claim it on their tax return.
In order to do that, they too would need to fill out Form 8962. Unfortunately, the IRS isn't rushing out to remind taxpayers to check their qualifications for these unclaimed subsidies.
Coming up next: Mistake #7 - Not Filing
Read About Mistake #5
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