IRS Publication 5187

On February 4, 2015, the IRS made available a document identifying best practices regarding the Individual Mandate for tax return preparers.

Why is this important for employers? If an individual did not have qualifying health coverage for themselves or any dependents for the full calendar year, the IRS encourages preparers to review their client’s documentation to determine the portion of the year during which the individual and any dependents did have qualifying coverage. The document lists a statement or document from an employer indicating health coverage as substantiation that coverage was in effect for a portion of the year. However, the document also advises preparers that they should not routinely or automatically advise their clients to seek documentation from their employer. Employers are not required to provide any such statement or documentation relating to the 2014 tax year, although employers may choose to do so voluntarily. Employees utilizing a tax preparer may ask  employers to provide documentation regarding coverage for the 2014 tax year, but this is not a requirement this year. For the 2015 tax year, employees receiving coverage through an employer-sponsored group health plan will receive a new form indicating their coverage status during the months of 2015.

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 On December 23, 2014, the IRS published a new document, IRS Publication 5187, designed to provide information to individuals about how the Patient Protection and Affordable Care Act (PPACA) will impact 2014 federal tax returns to be filed this year.

For the 2014 tax year, there are three new forms that may be used to complete an individual’s federal tax return:

  • Form 1095-A, Health Insurance Marketplace Statement
  • Form 8962, Premium Tax Credit & Instructions*
  • Form 8965, Health Coverage Exemptions & Instructions*

*These forms appear to be available in final form, although the final forms and instructions have not been added to the landing page for each form. The Form 8962 may be found here, and the Form 8965 may be found here.

IRS Publication 5187 also provides a list of other pertinent IRS publications and additional information about the Individual Mandate, how to obtain exemptions from the Individual Mandate, and premium tax credits that may be helpful for individuals. There is also a link to a chart illustrating the types of coverage that qualify as minimum essential coverage for purposes of satisfying the Individual Mandate.

Finally, IRS Publication 5187 addresses the new lines and check boxes on Forms 1040, 1040-A and 1040-EZ. If each individual in the taxpayer’s household had minimum essential coverage for all twelve months, the taxpayer will simply check a box indicating all household members had minimum essential coverage for the full calendar year. If any individual in the taxpayer’s household did not have minimum essential coverage for the full calendar year, the taxpayer will either claim a coverage exemption for the months during which coverage was not in effect, or will calculate and pay an individual penalty.

Considering these changes, individuals are encouraged to consult with a trusted tax adviser regarding their 2015 federal tax return, particularly those with a household member who did not have minimum essential coverage for each month of 2014 or those who qualified for a premium tax credit.

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