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04-14-2018 06:59 PM
My wife worked through July 2017 and had Employer-Provided Health insurance for the both of us. We then purchased Health insurance through the Marketplace for the last quarter of 2017(October, November, December).
We entered the 1095-C Employer info into the HR Block Tax program, and then the 1095-A Marketplace info. This generated a huge tax liability! (over $10K). We suspect because of the AGI (of about $70k).
We would like confirmation that this scenario is correct!?, and any viable recommendations to proceed from this point.
Thanks so much,
Solved! Go to Solution.
04-15-2018 12:12 AM
This does not seem correct.
First, I'm assuming that since you didn't mention any children, it's just you and your wife in your tax household. With your AGI of about $70k, you will not be eligible for premium tax credit subsidies on your health insurance because your AGI is above 400% of the Federal Poverty Level (FPL) for a family of 2. For 2017 ACA policies, 100% FPL=$16020, so 400% FPL=$64080.
This means that you'll be responsible for paying back any advance premium tax credits (APTC) you received to help pay for your Marketplace policy for October-December, however $10k seems like much more than you would have received for 3 months.
Given that you had a gap in coverage for August and September (I'm assuming that you had insurance at least one day of July since she was working through July) you may be being charged a penalty for not having health coverage for those months, but once again it shouldn't be in the thousands. AND you can avoid having to pay this penalty by going into the software and telling it that you qualify for the exclusion for a short gap in coverage since it was for only two months-- this will be a code B on form 8965. You'll have to enter the code for each of you separately. If you need guidance on how to enter this in the program, let me know whether you're using the online or desktop versions and I can help walk you through it.
So, No a $10000 increase in tax liability absolutely doesn't seem right. I'd recommend going back through the interview process and make sure that both insurance policies have been entered and that you've answered all of the interview questions correctly-- make sure that you scroll down on each page to make sure you're not missing any questions. If you don't figure out what's going on, I might be able to offer more guidance if I know what software type you're using.
04-15-2018 07:58 AM
Thank you for the reply! We had a feeling the large tax liability generated was not right(fair) for people in our situation.
It is just me(54) and my wife(48) in our household - no children. AGI about $70k. We had a gap in coverage in August and September, with a Marketplace policy for October-December.
We are using the desktop version of the software.
Please advise us how to enter the code in the software that we qualify for the exclusion for a short gap in coverage since it was for only two months. We will triple check the interview questions and data entered in the meantime.
04-15-2018 06:51 PM
Under Taxes, choose Health Care Coverage under Taxes, Penalties, and Payments Home. Go through the interview. One thing you may have missed: when entering your 1095-A information where you enter the people in your household, there's a question in Part III that asks if the amounts shown in Lines 21-32 Columns A, B, and C are correct and the exact same for all 12 months. Make sure you choose NO. (This may have been the source of your problem since it would have assumed you had gotten the APTC for all 12 months of the year-- which would be significantly more to pay back.) After you enter the amounts from your 1095-A on the screen that lists the amounts by month, you'll get a summary screen titled "Your Premium Tax Credit". Since your income was over 400% of the FPL, it's likely that the amount of advance premium tax credit you should have received will be 0 and the amount you're having to pay back will be equal to the amount of APTC you received. The amount you have to pay back should definitely NOT be more than the amount of APTC you received.
A couple screens later you'll get to a screen titled Marketplace Exemptions. You'll choose No for both of those questions unless you have applied for an exemption directly from the Marketplace. On the next page "Your Health Insurance Coverage", you'll have to edit the Coverage for EACH of you separately. On the Months with Health Insurance screen, make sure the boxes for all months except for the two you didn't have insurance are checked. When I was doing a test return, the ACA months weren't checked even though they said they had prechecked them. If this happens to you, don't worry, just check them and continue. (You won't need to answer the questions about Nov and Dec 2016 since you had coverage in January.)
The program apparently does the short gap coverage exemption automatically without you having to enter any additional information. If you want to make sure it has created this exemption for you, you can go to Forms and search for Form 8965. Looking at that form, you should see, in Part III, a line for each of you with exemption type B in Box C with the boxes for August and September "checked".
04-17-2018 06:37 PM
The source of the problem was the program assumed we had gotten the APTC for all 12 months of the year. We chose No in Part III that asks if the amounts shown in Lines 21-32 Columns A, B, and C are correct and the exact same for all 12 months, and re-entered the amounts on the subsequent screens following your guide. When done, the figures were in line.
Thank you so much for your diligent assistance!