IRS Form 1095—What Is It And Do You Need One?
As you prepare to file your 2022 income taxes, gathering the right documents is one of your biggest tasks. One document you may receive—or need to track down—is Form 1095. What is this form and where do you get it? And how does it affect your taxes? Here's what every American taxpayer needs to know.
What Is Form 1095?
Form 1095 is a relatively recent addition to the tax world. It's an informational form that is issued by health insurance providers to inform taxpayers of their health care coverage for the year. Each form lists basic information about the provider and coverage and each month that the taxpayer or dependents were covered by qualifying insurance. Covered taxpayers should receive Form 1095 for the prior year by the end of January.
Do You Need Form 1095 for Taxes?
Form 1095 actually comes in three varieties: A, B, and C. Forms 1095-B and 1095-C are provided to those who received insurance through a government or public agency or through their employer. These forms prove that you had insurance, but you generally do not need to attach them to your taxes.
Form 1095-A, though, is a different matter. This is for coverage purchased through state or federal health insurance marketplaces. The information from this form is often entered into Form 8962 (Premium Tax Credit) when preparing your federal income taxes. Why? You may qualify for a tax credit that pays for part or all of your premiums. Form 8962 reconciles any credit received in advance with what you qualify for.
How Does Form 1095 Affect You?
The IRS and most states do not require taxpayers to prove they had insurance through Forms 1095-B and C. However, if you are ever audited, you may be asked to show this proof. So keep these forms with your personal tax information.
Form 1095-A, though, can significantly help your bottom line if you qualify for the tax credit and purchase eligible marketplace insurance. This form is the only way to know this, and failure to enter its information will result in delays and notices from the IRS.
Where Can You Learn More?
New tax forms can be confusing. The fact that some of these related forms must be included in your tax filing while others aren't, adds even more confusion for many Americans. Learn more about your own Form 1095 and its impact on your taxes by meeting with a qualified tax preparation service in your state today.
Contact a local tax preparation service, such as Frady & Stafford, CPAs, PA, to learn more.