What should I do with an IRS letter 12C?

June 24, 2015 by Dave Du Val, EA
Rx bottle that says Affordable Care Act

Hey Dave,

I’m not even sure if this is an audit, but I thought you might be able to help me.  I received a 1095-A form for health insurance info from the Vermont Health Insurance Exchange/Marketplace after I had already filed my taxes. I now have received a letter from the IRS saying I’m required to reconcile the “advance payment amount” on my tax return. The letter says I have to fill out a Form 8962 and send it in with a copy of my 1095-A. Could you please help me understand this?

Mila

 

Mila,

Many taxpayers are receiving IRS Letter 12C this year due to the confusion surrounding the new health care tax provisions. The reason you received the letter is that during 2014 you or a dependent benefited from an advanced Premium Tax Credit, and now the IRS wants to you to reconcile the amount you received with the amount you are actually entitled to, based on the calculation they use to determine eligibility. The Premium Tax Credit is, in essence, a subsidy that enables taxpayers at certain income levels to afford to purchase the required level of health insurance coverage.

This letter is not a notification of an audit, but rather a tax preparation issue, as you submitted your tax return to the IRS without all of the required forms. Filing the requested forms should be all you need to do, though keep in mind that your tax liability might change as a result.

Deductibly Yours,

Dave

Recent Articles

Woman wearing eyeglasses
Prescription eyeglasses for correcting your vision are deductible as a medical expense, but you may not be able to deduct them based on other factors.
IRS Audit
Generally, the IRS has three years form the date the return is filed to conduct an audit. However, there are exceptions to this three-year rule.
Money, United States Treasury Check, 1040 Tax Form
If you paid off a prior year state or local tax obligation to your state, you can include these payments as a state tax deduction, subject to the $10,000 cap.
standard deduction or itemized deduction
Most taxpayers are familiar with the terms standard deduction and itemized deductions, but many are unaware of the differences between the two.

SEARCH

 

Rhonda D. Guillory, EA
Learning and Development Manager

 

Rhonda was a Seasonal Tax Return Reviewer at TaxAudit before joining the permanent staff as an Audit Representative in 2009. She has a Bachelor of Science in Computer Science and worked in the Information Technology field for 15 years before making a career change. Since transitioning to the field of income tax in 2003, she has prepared and analyzed hundreds of tax returns. Rhonda enjoys helping taxpayers and tax professionals learn and understand the fascinating world of income taxes. Currently, she is the Learning and Development Manager.


 

Recent Articles

Woman wearing eyeglasses
Prescription eyeglasses for correcting your vision are deductible as a medical expense, but you may not be able to deduct them based on other factors.
IRS Audit
Generally, the IRS has three years form the date the return is filed to conduct an audit. However, there are exceptions to this three-year rule.
Money, United States Treasury Check, 1040 Tax Form
If you paid off a prior year state or local tax obligation to your state, you can include these payments as a state tax deduction, subject to the $10,000 cap.
standard deduction or itemized deduction
Most taxpayers are familiar with the terms standard deduction and itemized deductions, but many are unaware of the differences between the two.
This blog does not provide legal, financial, accounting, or tax advice. The content on this blog is “as is” and carries no warranties. TaxAudit does not warrant or guarantee the accuracy, reliability, and completeness of the content of this blog. Content may become out of date as tax laws change. TaxAudit may, but has no obligation to monitor or respond to comments.