The 2018 tax forms require filers to indicate their health insurance coverage in 2018.
The Internal Revenue Service will not process individual tax returns in 2018.
What does this mean for you?
It means that if you, the taxpayer, does not report the status of your health insurance your tax return will not be processed. This means that you will not get the refund you are expecting.
So, what should you do?
You should make sure to report whether you had health insurance coverage or an exemption in 2018. If you did not have health insurance, then you need to tell your tax preparer.
All tax filers are still required to have health insurance or pay a penalty, but the IRS has accepted and processed returns in the past even if taxpayers didn’t indicated coverage status. This is not the case this year. The IRS is cracking down on all of us to ensure the health insurance is accounted for.
“To avoid refund and processing delays when filing 2017 tax returns in 2018, taxpayers should indicate whether they and everyone on their return had coverage, qualified for an exemption from the coverage requirement or are making an individual shared responsibility payment,” the IRS statement said. “This process reflects the requirements of the ACA [Affordable Care Act] and the IRS’s obligation to administer the health care law.”
This change did not take effect until this year 2018. This is the first time the IRS will not accept tax returns that omit this information.
What’s behind the latest move?
IRS spokesman Bruce Friedland said it followed a review of IRS procedures.
“The IRS has determined that it is more burdensome for taxpayers to allow them to file an incomplete tax return and then have to manage follow-up letters and potentially amend their return,’’ Friedland said. “Identifying omissions and requiring taxpayers to provide health coverage information at the point of filing makes it easier for the taxpayer to successfully file a tax return and minimizes related refund delays.”
Just last September, the IRS sent letters to approximately 130,000 taxpayers who did not address the health insurance question for the 2015 and 2014 tax return.
Under Obama Care (a.k.a. The ACA), the act requires U.S. citizens and permanent residents to have health insurance coverage or pay a penalty. For the year 2017, that’s the higher of 2.5 percent of adjusted gross income or $695 per adult and $347.50 for each child under 18 with a family maximum of $2,085. There are exemptions from the mandate, including the lack of access to affordable health coverage, filing for bankruptcy and the death of a family member.
So whatever you do, make sure you report your health insurance this year. You worked hard all year and deserve to get your money back if you are due a refund.
As for those of you who owe a fine/penalty, it is cheaper to pay the fine before April rather than have it compound interest after the tax deadline. You don’t have to pay it immediately if you are filing before April 2018, but if you wait until April to file you won’t know what you’ll owe and it will be harder for you to come up with the money to pay them on time. So even though it is extremely tempting to wait until the last minute to file, it will be extremely beneficial to file early and have time to save up the money to pay the IRS.