Want to claim your health coverage tax credit? If yes then you will have to fill out the IRS Form 8885. Now there will be so many questions flooding in your mind like ‘What is health coverage tax credit?’ or ‘What is IRS Form 8885?’ etc. You have come to the right place. Here you will get the answers to all such questions.
What is Form 8885 and How to Use It?
The main purpose of this tax form is to elect and figure the amount of your Health Coverage Tax Credit if there is any.
There are two different parts of this form:
- The first part holds information about the months in which you are claiming the Health Coverage Tax Credit for that financial year.
- In the second part the individual declares the total amount that he/she has paid directly to the qualified health insurance provider. In this amount you exclude any premiums that you have paid to the HCTC program directly, any advance payments or reimbursements you received or premiums paid through a national emergency grant.
If you are completing the Self‐Employed Health Insurance Deduction Worksheet in your tax return instructions and you were an eligible trade adjustment assistance (TAA) recipient, alternative TAA (ATAA) recipient, reemployment TAA (RTAA) recipient, or Pension Benefit Guaranty Corporation (PBGC) payee, you must complete Form 8885 before completing that worksheet. When figuring the amount to enter on line 1 of the worksheet, do not include:
- Any amounts you included on Form 8885, line 4, or on Form 14095, The Health Coverage Tax Credit (HCTC) Reimbursement Request Form;
- Any qualified health insurance coverage premiums you paid to “US Treasury-HCTC” for eligible coverage months for which you received the benefit of the advance monthly payment program; or
- Any advance monthly payments your health plan administrator received from the IRS, as shown on Form 1099-H, Health Coverage Tax Credit (HCTC) Advance Payments.
After filling out the form you also need to provide all the supporting documents. These documents should be a proof of the amounts that you are claiming in the form. If you do not attach these documents then your claim might get rejected.
Read More About: What is IRS Form 4868?
What If I am not Eligible for Claiming HCTC?
Even if you can’t claim the HCTC on your income tax return, you must still file Form 8885 to elect the HCTC for any months you participated in the advance monthly payment program. Failing to make a timely election will require you to report advance monthly HCTC payment amounts as an additional tax owed on your tax return.
What is Health Coverage Tax Credit?
This is a federally funded program. It was designed while keeping the goal of assisting people certified as displaced workers by the U.S. Department of Labor in mind. These people are more than 55 years old and receive benefits through the Pension Benefit Guaranty Corp. This program covers a major part of the health insurance premiums of these individuals. This way it helps the vulnerable sectors of the workforce to maintain health care coverage. The benefits that these individuals receive keeps on changing over time.
Who is Eligible for This?
In order to use the HCTC program the person needs to be an eligible recipient of a qualifying trade adjustment assistance program. And he/she should be currently on an approved break from such training or receiving unemployment insurance in lieu of training. If a person is 55 years or older than this and a PBGC payee then also he/she is eligible.
If an eligible individual passes away then his/het qualified family members can also claim the credit. For being a candidate the requirements are the same as any other health plan. The person must have paid more than half of the premiums. And he/she should not be claimed as a dependent on any other person’s federal tax return.
How to Register with the IRS?
In order to register with the IRS you have to fill out the and mail Form 13441-A to the IRS. Your form must accompany all the supporting documents that are required to enroll. You can also receive advance payments of the HCTC if your application is accepted by the IRS. Since these amounts are paid from the HCTC program, do not include these in form 8885 as part of your health insurance payment.
Read More About: What is IRS Form 2210?
By now you must have realized that wading through multiple tax forms is not easy at all. The taxation process can be an exhausting one if you have decided to handle everything by yourself. Filling out all these different tax forms correctly and that too before their deadline is a daunting task to do. Some of them are a little bit complicated so they require your full attention and focus. Making a mistake while filling out your tax forms is the last thing you would want to happen. IRS Form 8885 is one of such difficult forms. This is the time when you ought to think about taking some expert assistance.
On the off chance that you will take help from a dedicated and expert tax profesional then you can have confidence about things. You won’t need to stress over any of the perspectives. There is no compelling reason to stress over the exactness also. The straightforward explanation behind this is, these tax experts are very much aware of all the tax codes and most recent standards and guidelines. Their long periods of experience leaves them with just about zero odds of committing any errors while taking care of your things.
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