Consumers who received an advance premium tax credit (APTC) (also know as subsidy) or cost-sharing reductions in 2014 must file their taxes in order to remain eligible for their tax credit in 2016. The IRS recently began sending the attached notice to consumers, to remind them of the requirement to file a federal tax return with Form 8962, Premium Tax Credit, to reconcile their income to what was projected on their Healthcare.gov application.
- Those who do not reconcile their ACA tax credit (file their return) will be automatically renewed without thier tax credit in 2016 if they take no further action.
- The notice provides consumers the following information:
- Instructions for filing a 2014 tax return with Form 8962 using information on Form 1095-A provided by the Marketplace.
- How to obtain a new Form 1095-A if needed.
- The consequences of not reconciling APTC, including loss of eligibility for APTC or income-based cost-sharing reductions for coverage through the Marketplace in 2016.
- A suggested timeline for electronically filing a 2014 tax return within 30 days from receipt of this IRS notice to increase the consumer’s chances of avoiding a gap in APTC.
- The IRS notice to taxpayers does not clarify that a consumer may have filed taxes but did not file the correct form to reconcile ATPC.
Nationwide Data on Tax Filings
State-level information isn’t available at this time, but nationally:
- 57% of taxpayers have not successfully reconciled their 2014 APTC as of May 31.1
- 17% of taxpayers filed their taxes but failed to file the proper form 8962, as of May 31.
- 40% of taxpayers with 2014 APTC have not filed a tax return, as of May 31.
The IRS includes questions and answers related to failure to file and reconcile on its APTC Q&A webpage.
1 Letter to U.S. Congress from IRS Commissioner John Koskinen. http://www.irs.gov/pub/irs-utl/CommissionerLetterlwithcharts.pdf: Accessed July 24, 2015.