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Under the Affordable Care Act (ACA), you may owe an individual shared responsibility penalty if you did not have qualifying health care coverage for every month of 2016. When you complete your 2016 Form 1040, you will have to state whether you had this coverage (Line 61), qualified for an exemption from the penalty, or paid the penalty.

The IRS recently announced that if you do not provide this information when you file your return (a “silent” return), the IRS will not automatically reject your return when you file it (either electronically or on paper). This change was instituted in response to President Trump’s January 20th executive order concerning the ACA and the order’s direction to federal agencies to reduce potential burdens on taxpayers.

Does this mean you will not owe a shared responsibility penalty if you did not have coverage? No. The IRS explains that, “legislative provisions of the ACA law are still in force until changed by the Congress, and taxpayers remain required to follow the law and pay what they may owe.” In addition, even if you do not provide the information now, you may still have to provide it eventually, just at a later date and in response to an IRS inquiry. The IRS notes that, “taxpayers may receive follow-up questions and correspondence at a future date, after the [Form 1040] filing process is completed.”

More information is available at this link: https://www.irs.gov/tax-professionals/aca-information-center-for-tax-professionals

How much is the individual shared responsibility penalty? For both 2016 and 2017, it is $695 or 2.5% of income, whichever is greater.

IRS Forms 1095-A, 1095-B, or 1095-C may be used to provide proof of coverage. These forms are not filed with the 1040, but copies should be kept in case you are audited.

Source:  Monahan Law Office Legal Brief, February 21, 2017. Monahan Law Office, 4712 Admiralty Way, #349, Marina Del Rey, CA 90292