IRS Asking for 1095-A but I Have 1095-C. What Should I Do?

Navigating health insurance forms during tax season can be confusing, especially when the IRS requests a specific form you don’t have. This often involves Form 1095-A and Form 1095-C, which serve different purposes in reporting health coverage.

Why the IRS May Request 1095-A

The IRS may request Form 1095-A to verify health insurance coverage obtained through the Health Insurance Marketplace. This form details coverage information, such as start and end dates, premium amounts, and any advance Premium Tax Credit (PTC) payments received. The PTC helps eligible individuals and families pay for health insurance premiums, and accurate reporting ensures proper reconciliation of these credits on tax returns.

The IRS uses Form 1095-A to cross-check the taxpayer’s return with Marketplace data. Discrepancies, like underestimating income and receiving excess PTC, can lead to adjustments, potentially increasing taxes owed or reducing refunds. The IRS may also request this form if the taxpayer’s income doesn’t align with records or if the form was omitted when required. This situation can occur if a taxpayer mistakenly assumes they have employer-sponsored insurance when they actually had Marketplace coverage.

Confirming Marketplace vs. Employer Coverage

Distinguishing between Marketplace and employer-sponsored health insurance is essential for accurate tax reporting. The type of coverage determines whether you should receive and report Form 1095-A or 1095-C. If you enrolled in an employer-sponsored plan, you should receive Form 1095-C, which outlines the coverage offered, the months you were covered, and the lowest-cost premium available.

If you obtained health insurance through the Marketplace, Form 1095-A applies. This form includes details necessary for reconciling Premium Tax Credits. A common error arises when taxpayers believe they have employer coverage because they received Form 1095-C from a previous employer, even though they transitioned to Marketplace coverage during the year.

To confirm your coverage type, review correspondence from your insurance provider or employer, paying attention to coverage start and end dates. If discrepancies occur, contact your employer’s HR department or the Marketplace for clarification.

Using 1095-C to Report Employer Health Plans

Form 1095-C is issued to employees covered under an employer-sponsored health plan. It is part of the Affordable Care Act (ACA) compliance framework, which requires large employers to offer health insurance that meets minimum essential coverage and affordability standards.

The form has three sections: Part I identifies the employee and employer, Part II outlines monthly coverage details, and Part III (for self-insured plans) lists individuals covered under the plan. Employers must distribute Form 1095-C to employees by January 31 of the following year, aligning with W-2 distribution, so employees can prepare accurate tax returns. Employers also file copies with the IRS, with deadlines depending on the filing method.

Resolving Premium Tax Credit Questions

Reconciling the Premium Tax Credit (PTC) can be complex when discrepancies arise. Taxpayers must match advance payments with the actual credit they qualify for based on final income. The PTC is influenced by household income, family size, and regional costs.

When the IRS raises questions, prompt communication and documentation, such as income verification and proof of coverage, can help resolve issues. Taxpayers may need to recalculate the credit using Form 8962, which aligns advance payments with the actual PTC based on final income. Conducting a mid-year income review can help minimize discrepancies.

Correcting Filing Details with the IRS

Correcting inaccuracies in tax filings is crucial to maintain compliance and avoid penalties. If errors are detected, taxpayers can amend their returns using Form 1040-X. This form allows updates to filing status, income, and claimed deductions or credits. For example, a taxpayer who initially failed to report Marketplace coverage and the corresponding PTC would need to attach Form 1095-A and a recalculated Form 8962.

Amendments may result in additional taxes owed or an increased refund, depending on the corrections. The IRS generally allows three years from the original filing date to submit amendments. While addressing errors can be time-consuming, it ensures alignment with IRS records. Taxpayers should consider consulting a professional for complex corrections, especially when multiple forms or significant income changes are involved. Taking a proactive approach to resolving discrepancies helps avoid penalties and ensures accurate reporting.