More forgiving IRS to waive some bad 1095-A tax penalties
Wednesday, February 25, 2015
A kinder, gentler Internal Revenue Service was born back in 1998 when the IRS Restructuring & Reform Act was enacted.
Now the Affordable Care Act appears to have given us the forgiving IRS.
Premium tax credit considerations: Earlier this month, the IRS announced that it will waive some possible penalty charges in connection with calculations of the advance premium tax credit.
This tax break was created to help Obamacare purchasers cover some of the cost of the required health insurance coverage. Most who are eligible for the credit got it in advance when they bought their policies.
If, however, things changed after that health care marketplace transaction, folks could find themselves having to pay back that credit amount and more. That also, under normal tax circumstances, also would lead to penalties on the on underpayments.
But in this first year of ACA individual tax implications, the IRS won't demand affected taxpayers pay penalties on the tax credit late payments or associated estimated tax payment penalties.
1095-A relief, too: Now, in the wake of a problem with data on 1095-A Obamacare forms, the IRS also is exhibiting its expanded forgiving nature.
The agency says it won't collect any additional taxes from the around 50,000 people filed their tax returns using the incorrect data on their 1095-A forms.
That's only fitting, since the Health and Human Services Department revealed that the wrong form info was the result of "an intermittent defect in the code that was used to create these forms." Instead of listing information about Obamacare benchmark plans for 2014, the forms listed 2015 data.
But there is a limit to the IRS' forgiveness.
Limited to early filers: Although almost a million policy purchasers got error-ridden 1095-A forms, the tax relief only applies to the 50,000 or so who have already filed their taxes using the erroneous 1095-A data.
Corrected documents will be sent to everyone else affected by early March, says the IRS and Healthcare.gov. So wait for that good form before filling out your taxes.
And if you then find that you should have received a smaller tax credit and owe more, you'll have to pay that amount and ask the IRS for its previously announced relief on any associated penalties.
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