File Your 2014 Tax Return Immediately to Ensure You Can Receive the Benefit of Advance Payments of the Premium Tax Credit in 2016

September 9, 2015

The IRS issued a Health Care Tax Tip urging taxpayers who received the benefit of advance payments of the premium tax credit (PTC) in 2014 under the health care law to file their federal tax returns, and do it now, even if a valid filing extension was secured.

Why? Because insurance Marketplaces will determine eligibility for advance credit payments and cost-sharing reductions for the 2016 coverage year early this fall and you may not be eligible if you haven’t filed your 2014 tax return. By law, everyone who received the benefit of advance credit payments must file a tax return to reconcile their advance credit payments with the PTC amount they qualify for. If no tax return is on file with the IRS at the time of the Marketplace eligibility review, the ability to receive the benefit of advance credit payments, which could help you with your monthly insurance payments next year, may not be granted until you file your 2014 return. If the advance credit payment option is denied, you will then be responsible for the full cost of your monthly premiums and will not get cost-sharing reductions, which help with co-pays and deductibles. 

Don’t forget, processing a tax return can take time, sometimes 45 days or more. So, to avoid problems in receiving this help for your 2016 insurance policies, file your 2014 tax return, with IRS Form 8962, Premium Tax Credit, as soon as possible. 

The IRS is currently sending Letter 5591 to taxpayers who have not yet filed their returns, even if there is a valid filing extension shown on the account, to remind them of the importance of filing it along with Form 8962, Premium Tax Credit, before that Marketplace review begins. That letter reinforces the need to file tax returns within 30 days from the date of the letter. If you receive this letter and want more information, go to Understanding Your Letter 5591. In addition, if you received the benefit of advance credit payments for coverage in 2014 and do not file a 2014 tax return, the IRS will contact you to pay back the advance payments of the premium tax credit made on your behalf.

You may receive additional correspondence from your insurance Marketplace on this issue as well. The Open Season for securing 2016 policies is November 1, 2015 to January 31, 2016. The Marketplace review, to ensure each person did file and reconcile payments, will begin before the open season. So, again, file now to ensure that tax information is available before that review starts to protect your eligibility for assistance with paying for your or your family's health insurance coverage in 2016.

For more information about the Affordable Care Act and the premium tax credit, visit our ACA page or IRS.gov’s ACA page at IRS.gov/aca.