Penalty for not Filing a Form 8962

[azdolfan]

Florida

After receiving a 1095-A form, a tax return is required to have a form 8962. Person is disabled now and b/c of lump back pay of SSDI, exceeded the ACA income range. Return was filed with an extension, and due now. My question is, how serious can it be if the form 8962 is not filed with the return?

I found this on the IRS website where it said “if you don’t reconcile, you won’t be eligible for advance payments of the premium tax credit or cost-sharing reductions to help pay for your Marketplace health insurance coverage for the following calendar year”. https://www.irs.gov/individuals/reconciling-your-advance-payments-of-the-premium-tax-credit

Being on SSDI with Medicare, person does not need ACA this year or most likely the future. Is it really just the “following year”? Will they come after the $ still, even though that IRS site doesn’t state that it will? Future issues with tax returns (if person even has to file one)? Partial Payment was sent in with extension, will they refund that if no form 8962 or just send me Letter C and keep it? Thx in advance!

 

[LdiJ]

Florida

After receiving a 1095-A form, a tax return is required to have a form 8962. Person is disabled now and b/c of lump back pay of SSDI, exceeded the ACA income range. Return was filed with an extension, and due now. My question is, how serious can it be if the form 8962 is not filed with the return?

I found this on the IRS website where it said “if you don’t reconcile, you won’t be eligible for advance payments of the premium tax credit or cost-sharing reductions to help pay for your Marketplace health insurance coverage for the following calendar year”. https://www.irs.gov/individuals/reconciling-your-advance-payments-of-the-premium-tax-credit

Being on SSDI with Medicare, person does not need ACA this year or most likely the future. Is it really just the “following year”? Will they come after the $ still, even though that IRS site doesn’t state that it will? Future issues with tax returns (if person even has to file one)? Partial Payment was sent in with extension, will they refund that if no form 8962 or just send me Letter C and keep it? Thx in advance!

If the return is sent electronically without the form 8962 and the 1095-A then the return will reject. If the return is sent by mail without the form 8962 and the 1095-A then the IRS will not process it and will send a letter saying to submit for 8962 and the 1095-A or the return will not be processed.

In other words, a person who receives a 1095-A cannot submit a tax return without it. If no return is submitted then eventually the IRS will file one for the person, including the 8962 and the 1095-A and will charge them the full tax due.

See a tax pro for options on how to handle the lump sum SSDI payment.

 

[azdolfan]

Thank-you! Strange the IRS site doesn't state that. It sounded more like just banished from future advance payments for premium tax credits in the marketplace.

 

[LdiJ]

Thank-you! Strange the IRS site doesn't state that. It sounded more like just banished from future advance payments for premium tax credits in the marketplace.

By any chance do you have a link to the page where you read that? I am a tax professional and deal with this exact issue on a regular basis.

 

[azdolfan]

I finally found a VITA rep that helps after April 15th, but appts have been backed up since only on Thurs. I can't afford a paid tax prep. I know there is penalty if not filed in time, but is that penalty applied for the months after April 15th or after Oct 16th since I filed an extension? Thx

 

[LdiJ]

I finally found a VITA rep that helps after April 15th, but appts have been backed up since only on Thurs. I can't afford a paid tax prep. I know there is penalty if not filed in time, but is that penalty applied for the months after April 15th or after Oct 16th since I filed an extension? Thx

If you don't file by October 16th (this year it's the 16th) you lose the benefit of the extension. So you really want to try to file by Monday if at all possible. You could go ahead and file based on claiming the full lump sum SSDI benefit for 2022 and then explore a possible amendment if the VITA volunteer comes up with a better option for handling the SSDI lump sum. The failure to file penalty is going to end up costing you an additional 25% of the amount of tax you end up owing, so you really want to avoid that penalty if possible. You will still be subject to the failure to pay penalty either way, but that one is a much smaller percentage. You will also be subject to interest either way as well. However, the IRS interest rates are pretty reasonable. They are running about 8% annually right now. If you end up amending and your balance due goes down, the interest and penalty go down accordingly.