Sometimes it pays to file early.
Remember that embarrassing admission a few days ago that up to 800,000 taxpayers who purchased health insurance through the Marketplace (healthcare.gov) had received botched tax statements? Forms 1095-A, used primarily to determine health care credits, were mailed out using the wrong numbers for the 2014 tax year.
About 50,000 of those 800,000 taxpayers had already filed their tax returns using those bad forms. For some, the corrected numbers may result in a higher tax bill.
In good news for taxpayers, the Department of Treasury has announced that the Internal Revenue Service (IRS) will not collect additional taxes from those 50,000 (or so) taxpayers who filed using the bad forms 1095-A. In other words, if you’re one of those 50,000 taxpayers who has already filed using those bad forms and you would have owed money by using the corrected forms, there’s no need to file an amended return. If, however, you have already filed and the revised forms benefit you (meaning you’re due money back), you likely want to amend your returns.
How can you tell if the error will hurt or help you? The bad forms 1095-A included the monthly premium amount of the second lowest cost Silver plan for 2015 instead of 2014. A quick rule of thumb: if the number on your original (bad) form is less than number on your updated form, you may benefit from amending your tax return. So, for example, if your original form 1095-A included a premium amount of $200 and the correct number is $500, you might benefit from an amendment.
You’ll find these amounts on Part III, Column B of form 1095-A.
Be careful. You don’t get the same benefit if you’re one of the approximately 750,000 taxpayers who received the bad forms but hadn’t yet filed before the error was discovered. Those taxpayers need to wait for a corrected statement: new forms 1095-A should arrive by early March. When your corrected form is ready, you should see a message in your Marketplace account on HealthCare.gov.
If you’re not sure whether you have been affected, log into your account at HealthCare.gov. When you log in, you should see a notice advising whether you’ve been affected by the snafu. HealthCare.gov claims that 80% of taxpayers will find that their form was not affected by this issue and will be able to file as usual with the form on hand.
If you absolutely can’t wait, you can figure the correct numbers by either calling the Marketplace Call Center at 1-800-318-2596 (TTY: 1-855-889-4325) or going online. Of course, figuring it out on your own could be complicated – be willing to wait on the phone if you need assistance.
It’s important to note that this relief applies to those affected by the forms 1095-A issued from the federal exchanges. The Treasury may make similar concessions to taxpayers affected by bad forms issued by state-exchanges, like California but that has not yet been confirmed. Last week, Covered California admitted that about 100,000 forms 1095-A sent out in February – or 1 in 8 – included bad data.
