Well, it’s mid-summer and many taxpayers who have filed an extension are still thinking they have all the time in the world until their October deadline comes. However, if you filed for an extension and also chose to have “advance payments” of the Premium Tax credit made to your health coverage provider – it is important that you file your return sooner rather than later!
The Premium Tax credit is government assistance to help taxpayers pay for their healthcare premiums when purchased through the Marketplace. The Marketplace estimates the amount of the Premium Tax credit in advance through the use of information provided on the taxpayer’s family composition, projected household income and other relevant information. Taxpayers are given the option to receive all, some or none of their estimated credit paid out in advance directly to their insurance provider in order to lower their monthly out-of-pocket premiums.
If you choose to get the benefit of advance credit payments, you must file your tax return as soon as possible to ensure you can get advance credit payments made on your behalf from your Marketplace in future years. If you received an extension to file until October, you should file as soon as possible to reconcile any advance credit payments made on your behalf and to maintain your eligibility for future premium assistance.
If advance credit payments are made and you do not file a tax return, you will not be eligible for advance credit payments to help pay for your Marketplace health insurance coverage in future years. This means you will be responsible for the full cost of your monthly premiums. In addition, the IRS may contact you to pay back some or all of the advance credit payments that were made on your behalf. Yikes!
For more information, visit the Claiming the Credit and Reconciling Advance Credit Payments web page on IRS.gov/aca. If this applies to you, speak with your tax professional about filing a Form 8962 with your 2015 income tax return.
By Stacy Redmond