ACA penalty waiver -Financial hardship

[Taxadvisor VA]

TP cannot afford Heath Insurance and according to them it is > than 8% of their household income. Since this exemption is claimed on Form 8965, what do you tell your clients to keep as documentation to support this fact? _________

Thanks in advance,

Taxadvisor VA

[TAXNJ]

Try

Did you try researching for ACA documentation ? Need to if want to be a tax advisor even if in VA knowing about medical insurance coverage! Welcome to being a tax advisor.

[kathyc2]

TP cannot afford Heath Insurance and according to them it is > than 8% of their household income. Since this exemption is claimed on Form 8965, what do you tell your clients to keep as documentation to support this fact? _________

Thanks in advance,

Taxadvisor VA

There is a difference between premium being unaffordable and the hardship exemption.

The hardships exemptions are listed here:

Since you mentioned the 8%, I'm guessing unaffordable is the exemption you are looking for. You can look up 2014 bronze plan costs on healthcare.gov. The site says parts are currently down for scheduled maintenance. When it's back up from the healthcare.gov home page click the tax questions tools and answers and the next page will have a couple ways to see the 2014 bronze plan prices.

Since you are singing return, IMO, you should also keep documentation in your file that the lowest cost bronze plan is more that 8% of household income.

[TaxGuyBill]

according to them it is > than 8% of their household income.

That is not for them to determine. That is for YOU to determine.




First, you need to find out if any of the family members were eligible for insurance through their employer and/or if any family members were eligible for Medicaid.

If they were eligible for insurance through their employer, they need to find out and tell you the cost of insurance. They need to find out (1) lowest cost plan to cover ONLY the employee, and (2) lowest cost plan to the employee plus any dependents, and (3) lowest cost plan to cover employee and spouse.

If they were eligible for health insurance through more than one employer, you need to find out this information for each employer.


If they were not eligible for health insurance through an employer, then, as Kathy pointed out, you look up the information from the Healthcare Marketplace and fill out the worksheet on Page 11 of the instructions for Form 8965. You need to know the cost (1) the Lowest Cost Bronze plan for policies that cover the all family member that are NOT eligible for employer insurance, and (2) the Second Lowest Silver Plan for policies that cover the all family member that are NOT eligible for employer insurance OR Medicaid.

[TAXNJ]

Getting back

TP cannot afford Heath Insurance and according to them it is > than 8% of their household income. Since this exemption is claimed on Form 8965, what do you tell your clients to keep as documentation to support this fact? _________

Thanks in advance,

Taxadvisor VA

Getting back to what you are asking here "to keep as documentation to support this fact?" See 1st reply post as far as documentation IRS recommends.

Sounds like you did your work on the exception info. As you know client determines if they can afford the insurance using whatever method (employer; marketplace; etc).

Once all info is provided to you then you can do the return with applicable ACA forms. Again, See 1st reply post as far as documentation IRS recommends if that is what you are asking otherwise you will be all over the place trying to research info you already found.

[TAXNJ]

Where?

If they were not eligible for health insurance through an employer, then, as Kathy pointed out, you look up the information from the Healthcare Marketplace and fill out the worksheet on Page 11 of the instructions for Form 8965. You need to know the cost (1) the Lowest Cost Bronze plan for policies that cover the all family member that are NOT eligible for employer insurance, and (2) the Second Lowest Silver Plan for policies that cover the all family member that are NOT eligible for employer insurance OR Medicaid.

Missed this in the responsibility in preparing a return. Did not know the PREPARER goes to the "Marketplace" for info to do the return. Thought the client goes to the Marketplace if needed. Then client provides their medical insurance info to preparer in order to do the return.

Can you tell me your reference for the preparers responsibility for what you state "....you look up the information from the Healthcare Marketplace and fill out the worksheet on Page 11 of the instructions for Form 8965..."

Thanks

[TaxGuyBill]

Can you tell me your reference for the preparers responsibility for what you state "....you look up the information from the Healthcare Marketplace and fill out the worksheet on Page 11 of the instructions for Form 8965..."

You are right, I misphrased that sentence. It is the taxpayer's responsibility to give that to you, and our responsibility to determine if they qualify for the exemption or not (such as filling out the worksheet).

However, from my limited experience, it usually takes less time to look it up myself than to explain to the taxpayer how to correctly look up that information. :-)


As for documentation, they need to keep the details of how much the insurance would have cost them.