IRS Reporting (Form 1095B) for Exemption/Taxes/Penalties

[PhuketAmerican]

Hello-

     As a consequence of the "Affordable Care Act", aka "Obamacare" I received an IRS form (1085B)  letter informing me I must take this to my HR office at work and submit it to the IRS or else I will be penalized (fined) as part of the scheme to help pay for people who otherwise couldn't afford insurance or would not be insurable.

 

PLEASE- keep the snide remarks, politics, ad hominem attacks, and general shit posting about Obama, Trump, Obamacare, how x country is superior the US health system.

 

I am only looking for replies from American citizens who have faced the same issue..... basically, I am employed by a Thai company, I pay PLENTY of tax to the Thai government, and my health insurance is provided to me through an Irish company and paid for by my employer as a part of my compensation.

 

I am worried that I will be fined or something and have a problem with the IRS, I haven't filed taxes since moving here in 2012 because USA citizens making <90,000 USD a year are not required to pay taxes on income overseas, and I am under this threshold.  But with the provisions of Obamacare, it seems I may have to pay.... my insurance is not valid in the USA.

 

 SO LET ME KNOW IF YOU ARE FROM USA, working here, and filed taxes/ form 1095B Thailand, and how it worked out for yu

[Jingthing]

Living abroad full time, you are exempt from the ACA insurance mandate. You are not required to prove insurance abroad either if you meet the living abroad exemption.

The only issue is if you are talking long trips in the U.S. The rules for that are very specific, down to number of days you visit the USA.

 

As far as what to do with the form and potential issues about how you've haven't files in so many years, other working American expats can surely advise.

I live abroad and do file annually and simply claim the exemption. 

In my experience, many expats that don't owe taxes or are not required to file, file anyway to stay on the radar with the consideration that they may repatriate someday, etc. 

 

BTW -- you asked to avoid politics but you framed this in a political way insulting poorer and sicker fellow Americans that have benefited from ACA. 

 

Your words:

 

... scheme to help pay for people who otherwise couldn't afford insurance or would not be insurable.

 

That's quite a politically LOADED way of describing the ACA. 

[PhuketAmerican]

I didn't frame it politically, I just mentioned that under the ACA (Obamacare) the rules have changed with the penalties implementing this year and I did not fully understand them or how they would affect me here.  Thanks for the advice though, I only spend 2-3 weeks in USA per year.  I cannot find anywhere in the letter I recieved mentioning that I am exempt if living here full time, in fact the letter that arrived informed me that due to the implementation of ACA, I must fill out the form to prove I have Minimum Essential Coverage and comply with IRS reporting requirements... i am worried our Thai HR will have no clue what to do with this form or the requirements.

[Jingthing]

 

PERHAPS you should have been filing for the exemption (and perhaps even filing, period) because although you have been exempt from the ACA mandate, how does the IRS know that if you haven't CLAIMED that? 

 

The expat exemption doesn't get involved in whether you have coverage abroad. 

IF you were on the hook because of too much time in the USA, then indeed you would be required to have coverage that was good in the USA. 

Another detail people are wondering about now is whether because the new president signed an executive order suggestive of ending the mandate (thus ending the penalty for no insurance) does that mean the mandate is yet officially nixed. No, it does not. That will have to happen through actual LEGISLATION. 

[Thanyaburi Mac]

Separate from the ACA issue, but on IRS.  

 

You still need to file your annual 1040 with IRS even tho you're earning under $90,000 a year.  You must file then claim the Foreign Earned Exemption on Form 2555.

 

https://www.irs.gov/individuals/international-taxpayers/foreign-earned-income-exclusion

 

I'd think you could, and should, file for the last three year just to catch up.  You'll probably not owe a penalty since you're under the ceiling, but should file anyway to keep straight with IRS.

 

One item you should check out is the Self Employment Tax and various exemptions from paying.  

 

Mac

[ballbreaker]

Not owing taxes and filing requirements are two different issues.

 

If you had been filing you would have run across Form 8965 which is the health coverage exemption form.

 

Here's some reading you need to do.

 

https://www.irs.gov/individuals/international-taxpayers/u-s-citizens-and-resident-aliens-abroad

 

It you have foreign bank account or accounts that total more than $10,000 in total you are also required to file FBAR.

 

Here is more reading you need to do.

 

https://www.irs.gov/uac/newsroom/taxpayers-with-foreign-assets-may-have-fbar-and-fatca-filing-requirements-in-june

 

If you haven't already you need to download one of the tax software programs from TaxAct or TurboTax just to name a couple.  They will walk you through the IRS minefield so you don't miss any forms.  You can also download software package for previous years if you want to sort everything out before they come calling.

 

Keep in mind the US Treasury/IRS have access to bank account information in Thailand through an agreement so make sure you also report any interest earned.

 

 

 

 

 

[taxout]

Your employer can only give you a Form 1095-B if you were provided with insurance that meets Obamacare requirements. Insurance provided outside the U.S., it's fair to say, will not meet those requirements. So it's probably a waste of time to talk with your HR department.

 

But no problem. If you were only in the U.S. for three weeks in 2016, then you qualify for an exemption from the penalty for not having Obamacare. Like most tax benefits, the exemption is not automatic: you have to claim it on your tax return. You do this by attaching Form 8965 to your return. It's a very simple form. Apart from your name and Social Security number in a couple of places, you just put a "C" in the Exemption Type box (representing overseas presence) and check the "Full Year" box, since you were overseas -- by the IRS's reckoning -- for the full year. Finished!

 

(Now, not having filed a return for several years --- and presumably not the foreign bank account reports, either -- is another kettle of fish. This is pretty serious. You only get the Section 911 Earned Income Exclusion by filing a return and claiming it. Further, there are Draconian penalties for not telling the Federal Government about your foreign bank accounts, no matter how innocent they are. If you've been making, say, US$15,000/year, then maybe there's not that much at stake and you can handle this yourself. But if there's serious money adding up over those years, then you need professional help if only to avoid missteps that could make matters worse.)

[Jingthing]

Yeah, I also questioned his assumption that he didn't need to file at all.

Also, does the OP know about FBAR and whether or not he's violated that very, very serious requirement or not? 

[Pib]

Regarding not filing a tax return because of making less than the foreign income exclusion amount, you "still need to file a return."   You may want to review the IRS website regarding what to do.

https://www.irs.gov/individuals/international-taxpayers/foreign-earned-income-exclusion

 

 

And from another website that sums it up.

http://www.taxmeless.com/page2.html

 

Quote

 

Must I File a U.S. Return even if I make less than the $101,100 exclusion for 2016?

 Yes. If you fail to file a return and claim the exclusion there is a risk that the IRS may discover you are not filing returns and disallow the exclusion when you do file. If you come forward first before IRS notification and file all past unfiled expatriate returns, the IRS currently always allows the exclusion.

 

 

 

And you may want to read this FoxNews report which talks a little about about IRS enforcement of ACA coverage for tax year 2016.  Link and partial quote below.

http://www.foxnews.com/politics/2017/02/16/obamacare-in-death-spiral-aetna-ceo-says.html

 

Quote

 

Separately, the IRS is backing off from a tighter approach to enforcement that was in the works for this tax-filing season.

Under the law, people are required to have health coverage or risk fines from the IRS -- a penalty usually deducted from a taxpayer's refund. That underlying requirement remains on the books, and taxpayers are still legally obligated to comply, the IRS said.

But the agency is changing its approach to enforcement. Originally, the IRS had planned to start rejecting returns this year if a taxpayer failed to indicate whether he or she had coverage. Now the IRS says it will keep processing such returns, as it has in the past.

 

 

And don't forget FBAR/FinCen filing requirements if you had more than $10K aggregrate in one or more foreign accounts anytime during they tax year.

Yeap, U.S. citizens still retain various tax related filing requirements regardless of where they live in the world....and to claim most exemptions they still must file a tax return to prove you earn the exemptions.   The return may show you do not owe any taxes must you still must file in many cases.

You can use this IRS webpage to determine if you must file a tax return....takes about 10 minutes to walk yourself through the questions to get the final answer.

https://www.irs.gov/uac/do-i-need-to-file-a-tax-return

 

 

 

 

[gk10002000]

You have been ignorant of what is required of you.  You are required to file your USA Tax return.  If eligible, as you seem to be your foreign earned income could be exempt but you must file your taxes.  And as others have said, if you meet the living outside the USA requirements, you in general are exempt from having to subscribe to the ACA.  To calm the IRS and other agencies about not subscribing to the ACA I believe you MUST file your 1040 and then the Form 8965.  So even if you are properly exempt, if you don't file the right paperwork, the USA assumes you owe them!  In italics below I pasted what I think you need to do about the ACA going forward.  Not sure what to tell you about the letter request you got. 

 

How to claim this exemption.  You claim this exemption when you file your 2016 federal income taxes. Most people file their 2016 taxes in April 2017. On Form 8965, enter code "C" in Part III, column (c). Identify the months this exemption applies or select (d) for the full year.  include Form 8965 when you file your tax return.

 

As for having NOT filed a tax return for years, I personally know people in the USA that did not do it for 6 years.  Eventually he got with the IRS, a tax attorney and they got things worked out.  He DID pay a lot of taxes during that time through standard payroll deductions from the US companies he worked for, he just never filed his returns.  It turns out the IRS owed him a fair amount and he is all square.  Oh and in addition, while I have ever done this, I believe you have the option of paying into the US Social Security if you go through that mess.  In general Social Security is currently almost a negative return on one's investment, there are reasons to put monies in there to get qualified years.

 

Also as others have pointed out there may be some FBAR or FACTA things you might  be liable for.

[taxout]

"Oh and in addition, while I have ever done this, I believe you have the option of paying into the US Social Security if you go through that mess."

 

No, nothing optional about owing Social Security tax. You either owe it or you don't.

 

If you're an American who's self-employed overseas, then you owe Social Security tax at the self-employed rates.

 

If you're an American who works as an employee overseas, then you are not subject to Social Security tax (unless you work for an American employer, like a U.S. bank, say).

 

Of course, if you are subject to Social Security tax and pay in, your benefits will increase.

[Pib]

6 hours ago, gk10002000 said:

Oh and in addition, while I have ever done this, I believe you have the option of paying into the US Social Security if you go through that mess.  In general Social Security is currently almost a negative return on one's investment, there are reasons to put monies in there to get qualified years.

I recently started drawing my social security pension.....I will recoup every penny of social security tax "I paid" in over my work life in approx 3 years, 4 month.    Yes, my employers over the years paid an equal amount of social security taxes for me, but that came out of their pockets, not mine.  I'm just talking what "I" paid in social security taxes....what came out of my paychecks.

 

After those 3 years, 4 months (or 40 monthly pension payments) those payments will equal all the social security taxes I paid over the years.  Then, every social security pension dollar I get paid monthly for the rest of my life will be pure profit....return on investment. Hopefully I will continue to draw the payments for two or three decades before I kick the bucket.  

 

Me like my social security investment...forced as it may have been.

 

.

[Jingthing]

41 minutes ago, Pib said:

I recently started drawing my social security pension.....I will recoup every penny of social security tax "I paid" in over my work life in approx 3 years, 4 month.    Yes, my employers over the years paid an equal amount of social security taxes for me, but that came out of their pockets, not mine.  I'm just talking what "I" paid in social security taxes....what came out of my paychecks.

 

After those 3 years, 4 months (or 40 monthly pension payments) those payments will equal all the social security taxes I paid over the years.  Then, every social security pension dollar I get paid monthly for the rest of my life will be pure profit....return on investment. Hopefully I will continue to draw the payments for two or three decades before I kick the bucket.  

 

Me like my social security investment...forced as it may have been.

 

.

OK, that is fast but you paid in past dollars and are getting much less valuable future dollars, so I reckon your calculations aren't really strictly real.