The Affordable Care Act still exists and will affect individuals and families until months beginning after December 31, 2018. This includes imposing a penalty on many families without minimum essential or major medical coverage during 2018.
Several of my clients have already asked me about the Affordable Care Act (ACA) and were surprised to learn that penalties will continue to be applied for the tax year 2018 and collected on tax returns filed in 2019.
Here’s a quick overview of how the Tax Cuts and Jobs Act of 2017 (TCJA) relates to the tax year 2017 which is filed in 2018, just around the corner.
The ACA requirements remain the same for your 2017 (and 2018) tax years
The Affordable Care Act and the Individual Mandate are still part of your 2017 tax returns. In fact, the new TCJA does NOT do away with the penalty for many families not meeting the requirements for coverage during 2018. Although the TCJA sets the individual mandate penalty at zero, it doesn’t apply until months beginning after December 31, 2018.
The Affordable Care Act 1094 and 1095 forms are still required for 2017 (and 2018) tax returns
The Affordable Care Act also requires large employers to file informational returns and furnish statements to their full-time employees as to the coverage, if any, that they offer to full-time employees. This is done through the 1094-C and 1095-C forms.
Individuals use the 1095 forms to show the IRS whether they (1) qualify for the ACA premium tax credit and cost-sharing reduction subsidy and to show the IRS whether they (2) are required to pay the ACA individual mandate penalty. These forms were originally to be in the hands of enrollees and former enrollees by January 31, 2018. That date has again been pushed out to March 20, 2018.
What does this mean for 2017 tax returns?
This does NOT mean that individual tax filers should postpone filing their 2017 tax returns until they receive their 1095 forms. When you do receive them, keep them with your other 2017 tax return paperwork.
Although the TCJA has set the individual mandate penalty at zero, it goes into effect only for months beginning after December 31, 2018. Be prepared for any penalty to be attached to your 2017 tax return filing.
The individual mandate penalty remains the same for your 2017 and 2018 tax returns: $695 per adult or 2.5% of household income in excess of tax filing thresholds, whichever is higher. The TCJA doesn’t repeal the individual mandate, it simply reduces the penalty to zero.
All remaining aspects of Affordable Health Care, including the employer and insurer coverage reporting requirements, remain in place under the Tax Cuts and Jobs Act of 2017.
According to the IRS, if you do not have qualifying coverage or an exemption for each required month of the year 2017 (and 2018) you will need to pay the penalty when you file your return.
Anything Else? Always.
The IRS is already warning people to expect long waits (with apologies offered by IRS employees) when you call the help center.
The IRS will not process any returns until they go e-file live on January 22, 2018. Paper returns may be filed early, but processing won’t begin until the 22nd.
You should receive a W-2 from employers you worked for during 2017 by January 31, 2018. If not contact the HR/Payroll department and ask them to resend your tax documents.
By February 1, 2018, you should have received all 1099 statements that report non-employee compensation, bank interest, dividends, and distributions from retirement plans, etc.
Don’t be surprised if you don’t receive 1095s relative to health care. Don’t wait for these. File without them.
What’s the bottom line?
We establish and maintain a personal and business relationship with our clients. Your LIFE is your business and your BUSINESS is your life, and we’re here for YOU.
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