IRS points out 2014 individual tax return reporting changes
Fact Sheet 2015-9, February 2015
In a Fact Sheet, IRS has highlighted several of the changes that individuals should be aware of when completing their 2014 individual income tax returns, including changes related to the Affordable Care Act (ACA).
ACA changes. The ACA Act requires that a taxpayer and each member of his family either have qualifying health coverage for each month of the year, qualify for an exemption, or make an individual shared responsibility payment when filing his federal income tax return. Some moderate-income taxpayers may also qualify for financial assistance to help cover the cost of health insurance purchased through the Health Insurance Marketplace. Taxpayers will fall into one or more of the following categories:
- Check the box. Most taxpayers will simply check a box on their tax return to indicate that each member of their family had qualifying health coverage for the whole year. No further action is required. Qualifying health coverage includes coverage under most, but not all, types of health care coverage plans. Taxpayers can use a chart on IRS.gov to find out if their coverage counts as qualifying coverage.
- Exemptions. Taxpayers may be eligible to claim an exemption from the requirement to have coverage. Eligible taxpayers need to complete the new IRS Form 8965, Health Coverage Exemptions, and attach it to their tax return. Taxpayers must apply for some exemptions through the Health Insurance Marketplace. However, most of the exemptions are obtained from IRS when filing a return.
- Individual shared responsibility payment. Taxpayers who do not have qualifying coverage or an exemption for each month of the year will need to make an individual shared responsibility payment with their return for choosing not to purchase coverage. Examples and information about figuring the payment are available on IRS’s “Calculating the Payment” page.
- Premium tax credit. Taxpayers who bought coverage through the Health Insurance Marketplace should receive Form 1095-A, Health Insurance Marketplace Statement, from the Marketplace by early February. IRS says that any such taxpayers who haven’t received Form 1095-A by early February should contact the Marketplace where coverage was purchased, rather than IRS.
Taxpayers who benefited from advance payments of the premium tax credit must file a federal income tax return. These taxpayers need to reconcile those advance payments with the amount of premium tax credit they’re entitled to based on their actual income. Taxpayers should use IRS Form 8962, Premium Tax Credit (PTC), to calculate the premium tax credit and reconcile the credit with any advance payments.
See Weekly Alert ¶ 37 01/15/2015.
Tax benefits renewed. The Tax Increase Prevention Act, enacted Dec. 19, 2014, extended for 2014 a number of tax benefits that had expired at the end of 2013. This means that, as was the case in earlier tax years, eligible taxpayers can claim these benefits on their 2014 return. Renewed benefits include: the deduction for state and local sales taxes claimed by taxpayers who itemize their deductions on Schedule A; educator expense deduction claimed on Form 1040 Line 23 or Form 1040A Line 16 by teachers and other eligible elementary and secondary educators; and qualified charitable distributions by IRA owners age 70½ or older.
See Weekly Alert ¶ 52 12/18/2014.
One-rollover-per-year limit for IRA owners. Under a new rule, an IRA owner can make only one rollover from an IRA to another (or the same) IRA in any 12-month period, regardless of the number of IRAs he or she owns. The limit will apply by aggregating all of an individual’s IRAs, including SEP and SIMPLE IRAs as well as traditional and Roth IRAs, effectively treating them as one IRA for purposes of the limit.
While this rule only begins to apply in 2015, it could affect taxpayers’ actions with respect to their IRAs and their 2014 returns. There is a 2015 transition rule that ignores some 2014 distributions.
See Weekly Alert ¶ 38 11/13/2014.
Form 8891 filing requirement eliminated. IRS is eliminating a special annual reporting requirement that has long applied to taxpayers who hold interests in either of two popular Canadian retirement plans. As a result, many Americans and Canadians with registered retirement savings plans (RRSPs) and registered retirement income funds (RRIFs) no longer need to file Form 8891, U.S. Information Return for Beneficiaries of Certain Canadian Registered Retirement Plans, each year reporting details on these plans. The elimination of the Form 8891 filing requirement does not modify any other U.S. reporting requirements that may apply under the Bank Secrecy Act (BSA) and Code Sec. 6038D.
See Weekly Alert ¶ 21 10/09/2014.
New way to make tax payments. IRS Direct Pay, which debuted during last year’s tax-filing season, allows individuals to pay their tax bills or make quarterly estimated tax payments, directly from checking or savings accounts without any fees or pre-registration. See irs.gov/Payments/Direct-Pay
References: For the requirement that applicable individuals maintain minimum essential coverage, see FTC 2d/FIN ¶ A-6401 et seq.; United States Tax Reporter ¶ 50,00A4 et seq.; TaxDesk ¶ 576,151 et seq.; TG ¶ 1811 et seq. For the premium tax credit, see FTC 2d/FIN ¶ A-4241 ; United States Tax Reporter ¶ 36B4 ; TaxDesk ¶ 138,700 ; TG ¶ 1381 . For IRA rollovers, see FTC 2d/FIN ¶ H-11,460 et seq.; United States Tax Reporter ¶ 4084.03 ; TaxDesk ¶ 144,055 .