Why the 1095-A form affects my clients taxes

[brm2]

I am working on a client's tax return that has all 1099 form for filing and the 1095-A form. Before I include the 1095-A form it shows the client getting a refund but once I add the 1095-A form they owe for taxes and a lot. I'm trying to see why and are there any other things that I can try to help bring the amount down. Also, does the client actually have to file the 1095-A form?

[Jim-from-Ohio]

they owe because they made more than what they told the marketplace what they thought they were going to make

[Just-Lisa-Now-]

No, you cannot omit the 1095A from the tax return, it will reject.

Marketplace insurance requires the person to give them an estimate of their income for that year, so that they can figure the advanced premium tax credit (discount on their insurance premiums), if their income ends up being more than they told the marketplace, they have to pay back that premium (discount).

Did you LOOK at the pages of the return to see WHY they suddenly owe more money once the 1095A was added?  As a tax pro you HAVE TO be able to dissect the return and understand where and why the numbers end up where they do.

To reduce the payback, they need to lower their income, one way to reduce that payback would be making an IRA contribution (if they qualify) but for many people that's putting even more money out of pocket that they don't have.

[George4Tacks]

Yes, you have to file the 1095-A. They received a "discount" on health insurance based on what they said their income was. They made more than they said, so now they have to pay back that government subsidized "discount". 

It won't be accepted on e-file without the 1095-A. https://support.taxslayerpro.com/hc/en-us/articles/4417446545306-Desktop-IRS-Reject-Code-F8962-070

[alphy]

It's a nasty one. If they got advance credit for health insurance and their income is above 400% of the poverty level, they need to pay it all back. If it's somewhere below that but still on the high side, they may need to pay some of it back. I've seen paybacks as high as $25,000. You mentioned 1099's which is a clue your client is self-employed?? If you link the 1095-A to the Schedule C (bottom of 1095-A worksheet), ProSeries will automatically calculate the self-employed health insurance deduction. This will help your client out a little. If he's not self-employed, then there's a small chance it will help out on Schedule A, if he has enough other deductions to itemize.

And as was mentioned, don't even try to file without it. The IRS WILL NOT accept it. They have the checks and balances in place.