Health Insurance and Your Taxes: What You Need to Know

dave Affordable Health Care Leave a Comment

tax formHopefully you’ve already signed up for a health insurance plan by now. If not, what are you waiting for? The deadline for coverage is January 31, 2015 so time is running out! If you have already signed up, you may have some questions about what it means for your taxes.

Thankfully, it’s pretty simple. We’ll outline everything you need to know below.

If you had health insurance last year, you will soon be receiving a tax document in the mail called Form 1095-A. Watch the mail for an official looking (discreet) envelope that will contain this important form. If you’re the type of person who likes to get a head start on their taxes, make sure you wait at least until you have this document. When it arrives, store it with other important tax-related documents so you know exactly where it is.

If you received a tax credit on last year’s monthly premiums, you need to calculate and note how much that added up to over the 12 months. Then you find out what it should have been based on your actual yearly income. Then you reconcile the two using IRS form 8962. You must do this in order to be eligible for more financial help in the future. If the amount you should have received is more than you actually used, you will receive a credit for that.

When you sign up this year, you can expect to repeat the same process when it’s tax time next year. Remember, the penalty for not having insurance will go up again this year. So if you weren’t insured last year, you don’t need to worry about including it on your taxes. But if you don’t want to be docked again next year, you need to get insured now!

photo credit: Filing Taxes – 1040 Form via photopin (license)