Health Insurance Penalty 2018

[rlclemens]

Client filed MFJ 2018 return in 2019. Return reported that they did not have health insurance so they showed they received the penalty.. Client never paid as they knew they had the insurance. Client has 1095C for 2018 as proof of insurance. It's now 2024, would it do any good to file an Amended 2018 return, just to get the penalty removed?

[kathyc2]

Does transcript still show a balance due for 2018?

[rlclemens]

Yes - transcript still has balance due of 2,400 plus penalty & interest. Original liability on schedule 4 - line 61 - $2,400 from shared responsibility worksheet.

[kathyc2]

"If taxpayers owe a Shared Responsibility Payment for tax years before 2019, the IRS may offset that liability with any tax refund that may be due to them. The IRS routinely works with taxpayers who owe amounts they cannot afford to pay. This sometimes includes enforced collection action such as liens and levies. However, the law prohibits the IRS from using liens or levies to collect any SRP. If taxpayers owe the SRP, the IRS may offset that liability with any tax refund that may be due to them."

https://www.irs.gov/affordable-care-act/individuals-and-families/questions-and-answers-on-the-individual-shared-responsibility-provision

[rlclemens]

The problem is there never should have been a penalty in any year. Preparer made an error - and TP signed. Then TP received notices for not paying and he ignored.

[TaxGuyBill]

Yes, if they had health insurance they probably want to amend to remove that penalty/tax.

But double check the codes on the 1095-C to verify that it DOES show that they had insurance for the family. Merely receiving a 1095-C does not necessarily mean they had insurance (depending on the codes, it could mean other things, such as the employer merely offered insurance).