United States

ACA penalty on individuals without health insurance still applies

IRS will reject Form 1040 for missing health insurance information

TAX ALERT  | 

The IRS has indicated that it will not process 2017 individual tax returns that do not contain health insurance information. This is a change from prior years.

Background

Since 2014, individuals have been required to report on their Form 1040, U.S. Individual Income Tax Return, whether they have health insurance or qualify for an exemption from the shared responsibility payment imposed by the Affordable Care Act (ACA). However, tax returns were still processed by the IRS even if the returns were missing this information. If the IRS had questions about the return, it would send correspondence to the taxpayer at a later date after the return was processed.

Current status

Individuals are liable for a shared responsibility payment under the ACA for 2017 if they did not have health coverage or qualify for an exemption. Therefore, the IRS will not accept electronically filed tax returns for 2017 where individuals do not indicate whether they had health coverage, qualify for an exemption, or will make a shared responsibility payment. In addition, returns filed on paper without this information may be suspended pending receipt of the information, and any refunds may be delayed.

The IRS has reiterated that the ACA is still in force, and that taxpayers are required to follow the law and pay any shared responsibility penalties owed. See the IRS individual shared responsibility provision webpage for more information about this health insurance issue.

The individual shared responsibility payment requirements are also in effect for 2018, but will not apply to 2019 and later years due to the Tax Cuts and Jobs Act which was passed by Congress and signed by President Trump in December 2017.

AUTHORS


Subscribe to Tax Alerts



How can we help you with your tax planning & compliance?