Form 1095-C: Can my employee file their tax return without it?

February 2, 2017|Terri Lillesand

As a reminder, the IRS extended the due date to March 2, 2017 for which an employer must provide Form 1095 to its employees. The information contained on Forms 1095-B and 1095-C is not necessary for the completion of an individual income tax return, and the forms are not required to be attached to the tax return. In most cases, the lack of a Form 1095 does not prevent a taxpayer from filing their return.

As you know, an individual is subject to a penalty for failing to have insurance coverage on themselves, their spouse and their dependents. This is referred to as the individual mandate. For any month insurance is not obtained, the individual will be subject to a penalty unless an exemption applies. The penalty is reported on the individual’s income tax return.

A tax return preparer has to exercise due diligence when preparing a tax return. While a preparer does not require substantiation of every piece of information a client provides, a preparer does need to determine whether the information provided is reasonable and if not, to ask for proof.

Without having Forms 1095-B and 1095-C, some individual tax return preparers may ask their clients to provide proof of health insurance coverage. This can be done in a number of different ways:

  • Insurance cards showing effective date
  • Form W-2 box 12 showing code DD for the cost of insurance (only certain employers are required to report this information)
  • Explanation of benefits for health claims submitted
  • Medical bills showing insurance payments
  • Year-end paystub showing year-to-date premium deductions with the summary of benefits and coverage to show the annual premium amount

If you have any questions, please contact Terri Lillesand or another member of Schenck’s Health Care Reform team at 800-236-2246.

Terri Lillesad, CPA, tax shareholder, is a member of Schenck’s Health Care Reform Act Advisory team. She provides tax compliance and planning for corporate, individual, partnership, non-profit and fiduciary taxpayers.