Recently received an email from the IRS regarding this subject. Went on to state "Eight Important Facts abou the Health Coverage Tax Credit." Must confess I am a little ignorant on this. What are we to watch for as a preparer?
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I only had one client this year that was even close to being able to take this credit. The return was rejected due to information recieved from the state. Apparently the IRS has a data base of compines that the HCTC will apply to and if the clients not on it they get rejected. -
I had to uuse form 8885
last year to receve credit for payments I made to Cobra before the HCTC of the Treasury Department kicked in and started subsidizing my health insurance. Of course, I could only get credit for the actual payments I made to COBRA ( I think maybe 4 payments). It was a nice credit though. I had to then send my documentation attached to an 8453.
I would think those falling under Cobra where the government is subsidizng the payments through the former employer, they would only be able to deduct the 35% on schedule A, if they are able to itemize.
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