Changes to prepare for in the 2016 tax season. According to The Columbian newspaper, taxpayers who do not have health insurance may be subject to larger penalties, however, some taxpayers may qualify for an exemption; there are exemptions, which are listed further down the page. Those who receive insurance from their jobs will have a new tax form. According to Kathy Pickering, executive director of H&R Block®, the IRS has made adjustments to handle inflation, and Congress has extended tax breaks that were due to expire.
Most exemptions for not having health insurance are claimed when the tax return is filed using Form 8965, Health Coverage Exemptions. Those who do not have to file for a year due to their gross income being below the filing threshold are automatically exempt for that year and no action is necessary for an exemption.
However, if one’s gross income is below the threshold, which depends on their income and family status and they choose to file anyway, Part II of Form 8965 titled, Coverage Exemptions for Your Household Claimed on Your Return, in order to file a claim for exemption. Any other exemptions require Part III of Form 8965, which can be filed electronically with the tax return.
Some exemptions have to be granted by the Health Insurance Marketplace, this includes exemptions for hardships and religious reasons. If the exemption is granted, the Marketplace will mail out a notice with a unique Exemption Certificate Number (ECN).
This is an important document to hold onto. When the tax return is filed, the ECN is entered onto Form 8965 in column C of Part 1. However, if notice has not been received when taxes are filed, then the form would be submitted with the return by using a different line for each exemption claimed, this can also be filed electronically.
Other Exemptions Include
- If healthcare is not affordable, meaning the minimum amount of health care coverage, allotted through an employer or the Healthcare Marketplace, is more than 8.05 percent of the annual household income. This exemption is granted through the tax return.
- There was a short gap in coverage, which was less than three months in 2015
- Had been in another country for a minimum of 330 days in 2015
- A resident of another country for a period of time
- A U.S. territory citizen
- A resident alien who is from a country with which the U.S. has an income tax treaty with a nondiscrimination clause
- Someone who is not legally in the U.S.
- A nonresident alien; a dual-status alien in the first year of residency, or one who opts to file a joint tax return with a spouse who is a U.S. citizen
- A U.S. nonresident alien who files Form 1040-NR or Form 1040-NR-EZ
Additional 2015 Forms to File
- W-2s that report wages
- 1099 to report interest and dividend income
- 1098 for interest on a mortgage
- 1095-A if coverage was purchased through the Health Insurance Marketplace
The Internal Revenue Service (IRS) began accepting returns Jan. 19, 2016. Taxpayers have four extra days to file because it is a leap year, there is Emancipation Day in D.C., and for those who live in Maine or Massachusetts, Patriot’s Day offers another extra day to file, so the deadline this year is April 18.
Pickering says it is important to note changes in life because as people’s lives change, so will their taxes. Tax brackets, the standard deduction, and a number of exemptions have all been adjusted for inflation. According to author/consultant Barbara Weltman, there are fewer people who itemize their spending due to the standard deduction increases.
Weltman stated that the standard deduction in 2015, was $6,300 for singles, $12,600 for married couples who filed jointly, and $9,250 for those who filed as head of household. The IRS says personal exemptions have gone up to $4,000, as opposed to $3,950 in 2014. Tax season can be a stressful time for many, hopefully, these facts will help better prepare everyone for the 2016 tax season.
By Jeanette Smith
The Columbian: Tax season begins as IRS begins to accept returns
IRS: Individual Shared Responsibility Provision – Exemptions: Claiming or Reporting
Interview: CPA with H&R Block®
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