September 21st, 2014
In a few months, millions of Americans will be filing either form 8962 to reconcile the advance premium tax credit they received with the tax credit they were actually due, or form 8965 because they owe a tax under the shared responsibility (individual mandate) provision of the Affordable Care Act or claim an exemption from that requirement.
By the close of open enrollment in April, 6.7 million Americans had chosen a qualified health plan with premium tax credits, and many more have since enrolled in a QHP through a special enrollment period and received tax credits. Each of them will need to file a form 8962. The Congressional Budget Office estimates that 30 million Americans are potentially subject to the shared responsibility requirement, and that 23 million of them may qualify for an exemption. The 7 million individuals who owe the penalty will have to file a form 8965, as will most of the 23 million who claim an exemption.
On September 15, 2014 the Internal Revenue Service released draft instructions for form 8965. On September 17, 2014, the IRS released draft instructions for form 8962. It is difficult to overstate how complicated these instructions are. The tax credit and individual responsibility provisions of the ACA were complicated to begin with, but have become ever more complex as new exceptions and special rules have been created as implementation of the legislation has proceeded. Many of the mostly low income Americans who will be completing these forms are marginally literate, at least in English, and have been accustomed to filing very simple tax forms like the 1040-EZ (which cannot be used by an individual claiming a tax credit) or perhaps not to filing taxes at all. They are likely to be confused, frustrated, even angry, and certainly bewildered, completing these forms. It is to be hoped that most of them will be assisted by well-trained tax preparers.Read the rest of this entry »