There you were – anxiously awaiting your refund. But it seems like you should’ve received it already! You go to check the IRS website, only to discover that it says your return hasn’t even been filed! What?!
This year, for the first time, the IRS will reject your return–kick it back as if you had never even filed it–if you didn’t report having health insurance for the year. Instead of a refund, you will receive a letter from the IRS stating they did not process your return and that they now need a copy of your Forms 1095 and 8962. Responding incorrectly, or not at all, could cost you up to $2,000 in additional penalties.
Tax filings are required to match the IRS’ records for your social security number as well as everyone else’s included on your tax return. Your tax preparers are responsible for verifying health insurance coverage for each person on a tax return throughout the year. If you didn’t provide that information–for example, when submitting your return using self-filing software like TurboTax, HR Block Online, etc.–then the IRS will need Form 1095 and possibly Form 8962 to finish processing your return.
What is Form 1095?
Over the last several years most people have been throwing their Form 1095s away, but you should think of this form the same way you do a W-2 or 1099. Form 1095 reports that you had health insurance, how long you had it, and whether you received tax subsidies to pay for the health insurance premiums. It will also report the months you were not eligible for insurance through your employer, or if it was made available to you but not utilized.
For 2017 and 2018, this form is required to be sent to: A) All employees for whom insurance was available, B) To persons who bought private health insurance, and C) People who had tax subsidies through Healthcare.gov.
What is Form 8962?
Form 8962 is used to report any tax subsidies or changes in your income. If you had health insurance through Healthcare.gov and received tax subsidies to help pay the premiums, then you are required to reconcile those payments on this form. It may also require you to repay some or all of your tax subsidies if your income has changed since you originally signed up for health insurance through Healthcare.gov.
What happens if I don’t respond?
If you received tax subsidies, you will have to pay them all back and you will be ineligible for tax subsidies in the future. Or, if you did not have health insurance for any part of the year, you will most likely be assessed the health care responsibility penalty tax, which is indexed using your income.
I didn’t have tax subsidies, but I still got the rejection letter! How did that happen?
Some folks who used self-preparation software were able to file their returns without reconciling their tax subsidies, or even reporting if they had health insurance at all. Also, some professional tax preparers automatically check the box, “Everyone had full coverage” without ever verifying or collecting proof of coverage. In any of these circumstances, your tax return will probably be rejected and you will get a letter asking for more information.
What do I need to do?
People have started receiving these letters over the last couple of weeks. Once it’s received, you must respond within twenty days. That’s twenty days from the date of the letter, NOT the date that you received it.
The proper response is time consuming, requiring you to first obtain Form 1095 from your employer(s). If requested, you’ll then need to locate Form 8962 online, research your past subsidies, and calculate the total payments, note any changes in your income(s), ensure all the information is correct on both documents, and send the IRS a copy of each.
Can you help me?
Of course we can! Our cost to resolve the situation for you is a mere *$85, which pales in comparison to the time and effort it could potentially require to resolve it yourself.
If you want to make it easy, here’s what needs to happen:
- Send us an email (email@example.com) with your name, email, and a message “1095 help”
- We’ll send you access to a secure client portal
- In your portal,
- Complete the demographics form
- Sign the engagement letter
- Upload the requested documents
- Pay the service charge
Just make sure to notify us at least 1 week before the due date listed on your letter, since this is the amount of time it will take us to process your amended return.
We’re here to help.
*The $85 fee may be adjusted if you wish to talk at length about the notice letter, or require a thorough consultation.