The IRS has begun auditing taxpayers who purchased health insurance coverage through the Health Insurance Marketplace (also known as an exchange) and reported that they were eligible for a premium tax credit (PTC) when filing their Form 1040. The IRS audit letter (Form 14950) states that if the taxpayer did not retain the documentation requested by the IRS, s/he needs to contact the appropriate parties to obtain this information.
The information requested by the IRS includes:
- Form 8962 – which would have been included in the filed return if the PTC was claimed;
- Form 1095-A, 1095-B, and Form 1099-C if any of these forms are applicable to your situation. The A form would have been received by a marketplace insurance provider; the B form by an insurance provider; and the C form from an employer. Whereas most taxpayers likely only received one of these 1095 forms, those taxpayers who were unemployed for a portion of the year or changed employers could have more than one of these 1095 forms.
- For those persons in your household for whom a PTC was claimed, the IRS wants to see for each person copies of insurance enrollment forms, invoices, or statements from the insurance providers listing these persons.
- Proof that the claimed health care premiums were paid such as copies of both sides of cancelled checks, paid receipts certificates of group health plan coverage, credit card statements, or bank statements showing direct debit of the payments made.
- The IRS also is requesting support from those persons who allocated the PTC with another taxpayer or who married during the tax year.
While some of the information requested may have been included in the taxpayer’s Form 1040 tax return or third parties provided the appropriate Form 1095 to the IRS, the IRS is requesting that all items be sent to it in response to the Form 14950 audit letter. To close out the audit examination as early as possible, it would be best if the taxpayer provided the IRS with the requested information a second time.
If you want to discuss your business or personal tax planning, tax preparation and other financial concerns with an experienced tax professional, we invite you to call 610-594-2601 today to make an appointment at our Exton PA CPA office to discuss your situation. You can also schedule a consultation at Click Here.