(Last updated: 6 Mar 2024)
Which details from your 1095 and 1098 forms should you include on your tax return?
In March 2010, when President Obama signed the Affordable Care Act (ACA) into law, three new forms were introduced into the US tax system – 1095 A, B, and C.
The primary focus of these forms is to account for the healthcare coverage you purchased during the tax year.
However, if you are a nonresident in the US, you may be wondering why you received a 1095 form (especially when you consider that purchasing healthcare coverage through the Health Insurance Marketplace is not mandatory for nonresidents) and whether or not you can claim any benefits on your tax return.
The answer to this question very much depends on your personal circumstances and the type of form you received.
In this guide, we will cover everything you need to know about 1095 forms and how to file a compliant tax return.
What is a 1095-A?
If you purchased healthcare coverage through the Health Insurance Marketplace (‘Obamacare’) you will receive a form 1095-A (Health Insurance Marketplace Statement).
This form tells you:
- The amount of advance payments of the premium tax credit (more on this credit below) you received
- Your health coverage by month
- And some other details about your health insurance
You should receive your 1095-A in the mail by mid-February.
Be sure to check out HealthCare.gov where you may also be able to download the form.
How is a 1095-B different to a 1095-A?
Where your healthcare has been provided either through your school or a third-party health insurance company, you will probably receive a 1095-B OR a 1095-C.
IRS form 1095-B details the months of coverage that you, your spouse and/or any eligible dependents had for each month.
Speaking generally, forms 1095-B and 1095-C are the catchall forms that are issued for any type of healthcare coverage not on a form 1095-A.
What does a form 1095-C cover?
If you received healthcare coverage through your employer (who has more than 50 employees), you will receive a form 1095-C.
Form 1095-C is used by the employer to report the full information for all twelve months of the calendar year for each full-time employee.
Do I need my 1095 form when filing my nonresident tax return?
Generally speaking, nonresidents (particularly international students and scholars) will not need their 1095 B or C when filing their tax return.
That said, it’s a good idea to keep these forms filed away somewhere safe should you need them in future.
In very limited circumstances (this is mostly relevant to residents), 1095-A can be used to claim a tax credit in your tax return.
In short, you will need your 1095-A if you enrolled in coverage through the Health Insurance Marketplace last year. You will need this form as it will determine if you got too much or too little of the advance premium tax credit.
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What is the premium tax credit?
Taxpayers who purchase health insurance through a Health Insurance Marketplace for themselves or others in their family may be eligible for the premium tax credit.
This tax credit helps make purchasing health insurance coverage more affordable for people with low to moderate incomes.
You will either receive it as an advance credit or claim it as a refundable credit on your tax return. So, even if you owe little or no tax, you can still benefit from the credit.
There are a couple of things to keep in mind if you receive the “advance premium tax credit”.
This advance tax credit is paid to your insurance provider directly each month and helps reduce your health insurance premium.
When you prepare your taxes, you must reconcile the advance paid to your insurance company. This means that if you receive too much premium tax credit, you will have to subtract the balance from any tax refund you are owed.
If you are not due a tax refund, you must simply pay the balance to the IRS. Alternatively, if you were due to receive more support through this credit, you can add it to your tax refund.
What about 1098-T and 1098-E? Do I need these forms when filing my return?
1098-T (Tuition Statement) is a summary of all of the fees that you have paid to the university during the tax year.
In general, it is used by US residents to claim educational tax credits based on the fees that they have paid for their education in the previous year.
It’s important to note that nonresidents are not entitled to claim educational tax credits. So, with that in mind, you will not need your 1098-T when filing your nonresident tax return.
If you do include your 1098-T on your tax return, this means that you will be filing as a resident and you will not be compliant with the IRS.
Is a 1098-E different to a 1098-T?
Yes. You will receive a 1098-E form (Student Loan Interest Statement) if you made student loan payments during the tax year.
The good news is that you may be eligible to deduct a portion of the interest paid on your federal tax return. So it’s important to keep a copy of this form close by when filing your taxes.
You can potentially deduct up to $2,500 worth of student loan interest from your taxable income if you meet the following requirements:
- The interest was paid by you
- You are not filing your taxes as ‘married filing separately’
- You cannot be claimed as a dependent on anyone else’s tax return
- Your income is below the annual limit
Your student loan servicer (who you make payments to) will provide a copy – either physical or electronic – of your 1098-E to detail the interest paid in a tax year.
Amounts exceeding $600 of student loan interest will be reported on the form.
International students who have multiple student loans may receive a separate 1098-E from each servicer.
What happens if my tax return is not filed correctly?
If you file an incorrect tax return – perhaps by claiming tax reliefs which you are not entitled to or by filing as a resident when you should have filed as a nonresident – you will not be compliant with US tax law.
As a result, you may incur fines or penalties from the IRS.
What’s more, if you intend to apply for another US visa in future, your application may be rejected if your tax record is not clean.
Who can help me file my taxes?
Sprintax was designed specifically to help nonresidents to prepare and file fully compliant US tax returns.
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