How Obamacare Screwed Up 800,000 Tax Returns

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Posted by Ryan Ellis on Friday, February 20th, 2015, 1:00 PM PERMALINK

The Associated Press is reporting today that an "erroneous" glitch in Obamacare tax forms is causing filing season to come to a halt for 800,000 taxpayers.  Tens of thousands of these families have actually already filed and will need to file amended returns redundantly.

Americans for Tax Reform can shed some light on what the "erroneous" problem is.  The affected form for Healthcare.gov enrollees is known as an IRS Form 1095-A.  It documents health insurance coverage obtained through the federal healthcare.gov exchange.  It reports premiums charged by month.  It is supposed to also report the amount of a tax credit advanced from the IRS to the covered family's insurance company.  Finally, a middle column is supposed to say what the average premium amount was for the second lowest-cost silver plan (the poetically-named "SLCSP").

All three inputs--monthly premium cost of the health insurance plan, the SLCSP, and the advanced premium tax credit amount--are vital to calculating the accurate tax credit a taxpayer is entitled to under the Obamacare law.  Without even one of these inputs, the calculation is thrown off.  It would therefore also be impossible to determine whether the advanced tax credit was too generous (in which case the taxpayer may owe the IRS money), or too stingy (in which case the taxpayer claims the remaining credit amount on his 1040 filing).

ATR has obtained two 1095-A tax forms issued to healthcare.gov customers.  In each case, the silver plan column each month had an entry of "$0.00."  No data was provided.  It was impossible for these taxpayers to even make a guess of what their tax credit for the year was supposed to be, or if they were due a tax credit at all.  

It is ATR's belief that these 800,000 taxpayers were similarly issued 1095-As without the absolutely vital SLCSP numbers.  Until those numbers are provided by the dysfunctional healthcare.gov bureaucracy, it will not be possible for these taxpayers to complete their income tax filing accurately. They will not be able to determine if any advanced tax credits they received were too generous or too stingy.  

800,000 families are literally caught in limbo until healthcare.gov gets its act together.

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