Some service members' tax refunds are delayed because they didn't file their tax returns correctly under new requirements of the Affordable Care Act.
They've received letters from the Internal Revenue Service stating they must provide more information and forms — specifically Form 8962, relating to advance payments of tax credits toward insurance premiums. This can result in a delay of a couple of months if the tax filers are due a refund.
"The key question is whether you got advance payments of premium tax credits by buying health care coverage on the marketplace," said Army Lt. Col. Samuel Kan, executive director of the Armed Forces Tax Council. If you did, you need to file IRS Form 8962 with your tax return.
The federal government pays the credits to insurance companies on behalf of anyone in the country who bought coverage from the health insurance marketplace and whose income fell within a low to moderate range. The advance payments help lower the cost of some customers' marketplace health insurance.
"Many of our members are probably going through this," Kan said. People need to pay particular attention if they entered or left the military in 2015, or got married, he said. Service members or spouses may have had health care coverage through the health insurance marketplace for some part of the year when they were not affiliated with the military. Upon entering the military, the service member has health care coverage, and upon marrying a service member, the spouse will have Tricare. It's the part of the year when the service member or spouse may have bought insurance on the health insurance marketplace that's key.
The information is reflected on Form 1095-A, Health Insurance Marketplace Statement, that the taxpayer receives from the health insurance marketplace.
"This is definitely an issue. I've been getting letters," Kan said. "This is all new for everybody. You might miss it if you file your taxes yourself, and the tax center might miss it as well." He advises that anyone visiting a military tax center for tax preparation, or another tax preparer, should let that preparer know if they've had a significant life change such as entering or leaving the military in 2015, or getting married.
According to a letter from the IRS received by one service member, his tax refund would be issued in about six to eight weeks from the time the IRS receives his response.
The IRS has records showing who received advance payments of the premium tax credit. Those payments are made to the insurance company on behalf of the person insured. But taxpayers who were beneficiaries of these payments may have received too much tax credit or too little. Filling out Form 8962 reconciles the amount to determine if they should have received more credit, or less credit, which could affect the amount of taxes owed, or the refund.
If you've already filed your tax return and realize you should have filed a Form 8962, wait for a letter from the IRS, Kan advises. Follow the instructions in the letter. The response should be sent to the IRS within 20 days of receiving the letter. "If we don't receive a response from you, we may have to increase the tax you owe or reduce the refund," the letter stated.
Karen Jowers covers military families, quality of life and consumer issues for Military Times. She can be reached at kjowers@militarytimes.com.
Karen has covered military families, quality of life and consumer issues for Military Times for more than 30 years, and is co-author of a chapter on media coverage of military families in the book "A Battle Plan for Supporting Military Families." She previously worked for newspapers in Guam, Norfolk, Jacksonville, Fla., and Athens, Ga.
