minimum essential coverage

Misconceptions And Truths About W-2s, 1099s, and 1095s

There are many misconceptions about IRS tax forms, especially W-2s, 1099s, and of course the new 1095 forms introduced by the Affordable Care Act. This blog will attempt to clarify the misconceptions and truths about these forms but first, some background information.

The IRS requires employers to report wage and salary information for employees on Form W-2, which also reports the amount of federal, state and other taxes withheld from an employee’s paycheck. Another well-known IRS form used to report income is the 1099-MISC (Miscellaneous Income), which reports payments made in the course of business to individuals that are independent contractors, as well as similar payments to sole proprietorships.

What Are 2016 Form 1095-B and Form 1095-C?

What Are 2016 Form 1095-B and Form 1095-C?

Close up business man signing contract making a deal, classic business

Form 1095-B

Form 1095-B is a health insurance tax form which reports a taxpayer’s type of coverage, dependents covered by the insurance policy, and the period of coverage for the immediately prior year. This form is used to verify on a tax return that taxpayers and their dependents have at least minimum qualifying health insurance coverage. Those who have health insurance that meets the standards of the law may receive Form 1095-B directly from their health care insurer and from employers who have less than 50 full-time employees (small businesses).

2016 Affordable Care Act Changes For Individual Taxpayers

The Affordable Care Act (“ACA”) imposes the requirement that all Americans acquire health insurance that qualifies as “minimum essential coverage” under the Act. Otherwise, taxpayers may have to make a shared responsibility payment to the IRS when they file their tax return in April. The ACA also allows for a tax credit known as the premium tax credit for taxpayers that purchase health coverage through the Health Insurance Marketplace.

Known as the individual shared responsibility provision, it requires a taxpayer, his or her spouse, and their dependents to have health insurance minimum essential coverage for the entire reporting year. Most taxpayers already have qualifying health care coverage, and will simply report this fact on their return by checking a box.

Testimonials

Categories