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IRS guidance for claiming health coverage tax credit for 2014 and 2015

Notice 2016-02, 2016-02 IRB

In a Notice, IRS has provided guidance on who may claim the health coverage tax credit (HCTC), the amount of the credit, and the procedures for claiming the credit for tax years 2014 and 2015.

Background. The HCTC helps certain trade-affected workers, retirees, and their families pay their health insurance premiums. The HCTC makes health coverage more affordable by paying 65% of health insurance premiums for individuals who are eligible for the tax credit. (Code Sec. 35)

The HCTC is a refundable tax credit—it is paid in full no matter how much federal income tax an eligible individual owes. It is available on a monthly basis to help individuals pay their health insurance costs as they become due or on a yearly basis when they file their federal tax return. The HCTC Program partners with various federal and state agencies and Health Plan Administrators to deliver the tax credit to eligible individuals.

New guidance. The Notice provides information on who may claim the HCTC, the amount of the HCTC, and the procedures to claim the HCTC for tax years 2014 and 2015. It also provides guidance for taxpayers eligible to claim the HCTC who enrolled in a qualified health plan offered through a Health Insurance Marketplace (Marketplace, also known as an Exchange) in tax years 2014 or 2015, and who claimed or are eligible to claim the premium tax credit (PTC) under Code Sec. 36B (including taxpayers who received the benefit of advance payments of the PTC).

The Notice will be covered in greater detail in a forthcoming article.

References: For the HCTC, see FTC 2d/FIN ¶  A-4232; United States Tax Reporter ¶  354; TaxDesk ¶  569,401; TG ¶  1401.