Have you recently received a Form 1095-C and are wondering what to do with it when filing your taxes with TurboTax? You're not alone! Many people get a bit confused by this form, but the good news is that for most taxpayers, adding it to TurboTax isn't as complicated as you might think. In fact, for federal tax purposes, you typically don't need to directly enter your 1095-C information into TurboTax.
Let's break down why you receive this form, what it means for your taxes, and how to correctly handle it with TurboTax.
Understanding Form 1095-C: Your Employer-Provided Health Coverage
Before we dive into TurboTax, let's clarify what Form 1095-C is all about.
What is it? Form 1095-C, "Employer-Provided Health Insurance Offer and Coverage," is a tax form provided by Applicable Large Employers (ALEs) to their full-time employees. An ALE is generally an employer with 50 or more full-time equivalent employees.
What's its purpose? This form reports important information about the health insurance coverage offered to you by your employer. It details whether coverage was offered, the cost of the cheapest monthly premium for self-only coverage, and the months you were eligible. This information helps the IRS verify compliance with the Affordable Care Act (ACA), specifically the employer shared responsibility provisions.
Do you need to file it with your tax return? No. Unlike a W-2 or a 1099, you do not attach Form 1095-C to your federal tax return. Your employer sends a copy of this form directly to the IRS. You should keep it for your records, just like any other important tax document. It serves as proof of your health coverage.
Why the Confusion? (A Brief History Lesson)
In previous tax years, the Affordable Care Act (ACA) included a "shared responsibility payment" (often called the individual mandate penalty) for individuals who didn't have minimum essential health coverage. During that time, Forms 1095-A, 1095-B, and 1095-C were more actively used by taxpayers to report their coverage and avoid this penalty.
However, for tax years starting in 2019, the federal individual mandate penalty was reduced to $0. This significantly changed how most taxpayers interact with these forms. While the forms are still issued, their direct impact on your federal tax filing is now minimal, unless you purchased health insurance through a state or federal marketplace and received a Form 1095-A (Health Insurance Marketplace Statement). The 1095-A is critical for reconciling any Premium Tax Credit you may have received.
Step-by-Step Guide: Handling Form 1095-C in TurboTax
Now, let's get to the practical steps for dealing with your Form 1095-C in TurboTax.
Step 1: Don't panic! Have you received your 1095-C? Good! The first thing to understand is that for most people, adding a 1095-C to TurboTax is a simple confirmation, not a data entry marathon.
This form is primarily for informational purposes, allowing the IRS to confirm that large employers are offering health coverage as required by law.
Step 2: Locate the Health Insurance Section in TurboTax
Once you're logged into your TurboTax account and working on your tax return, you'll need to navigate to the health insurance section.
Sub-heading: Using TurboTax Online/Mobile:
From the main menu or dashboard, look for a section related to "Health Insurance" or "Affordable Care Act (ACA)".
You might find this under the "Deductions & Credits" tab, then typically within a sub-section like "Medical" or "Health Insurance."
TurboTax is designed to ask you direct questions. You can often use the search bar at the top right of the screen (if available) and type "1095-C" or "health insurance" to quickly jump to the relevant section.
Clicking "Jump to 1095-C" or a similar link will take you there.
Sub-heading: Using TurboTax Desktop/CD Download:
Open your tax return.
Navigate to the "Federal Taxes" tab (or "Personal" depending on your version).
Select "Deductions & Credits."
Look for the "Health Insurance" or "Affordable Care Act" category.
You can also use the "Search" function (often a magnifying glass icon) and type "1095-C" to find the relevant interview questions.
Step 3: Answering the Health Coverage Questions
This is the crucial part. TurboTax will guide you through a series of questions about your health insurance coverage for the year.
Sub-heading: Confirming Your Coverage:
You will likely be asked, "Did you have health insurance coverage for all of [Tax Year]?"
If you had coverage through your employer for the entire year (as indicated on your 1095-C), you will generally answer "Yes" to this question.
If you had coverage for only part of the year, you will answer "No" and then specify the months you were covered. Your 1095-C will show which months you were offered and enrolled in coverage in Part II.
Sub-heading: Distinguishing Between Form Types:
TurboTax will then likely ask if you received a Form 1095-A from a state or federal health insurance marketplace.
This is where the distinction is very important. Since your 1095-C is from your employer, you will almost always answer "No" to the question about receiving a 1095-A, unless you also had marketplace coverage at some point during the year (which is less common if you had employer coverage).
Do NOT try to input 1095-C information where it asks for 1095-A details. This is a common mistake and can lead to rejections or errors.
Step 4: No Direct Data Entry for 1095-C (Usually)
For most users, once you've confirmed you had health coverage and indicated that you did not receive a 1095-A from a Marketplace, you are done with your 1095-C. TurboTax generally does not require you to enter the specific box-by-box information from your Form 1095-C.
Sub-heading: Why No Direct Entry?
As mentioned, the 1095-C is largely for the IRS's tracking purposes and your own records.
The primary reason for entering health insurance information in tax software is to reconcile the Premium Tax Credit (which only applies to marketplace plans reported on Form 1095-A) or to determine if you owe a penalty for lacking coverage (which, federally, is $0 since 2019).
Your employer has already sent the details of your coverage to the IRS directly.
Step 5: Keep Your 1095-C for Your Records
After you've gone through the health insurance questions in TurboTax and confirmed your coverage, simply file away your Form 1095-C with your other important tax documents (like your W-2s, 1099s, etc.).
Sub-heading: Why Retain It?
It serves as documentation of your health coverage.
In the unlikely event of an IRS inquiry or audit, you will have the necessary proof of your health insurance.
Some states may still have individual health insurance mandates or require health coverage information, so keeping the form is always a good practice.
What if TurboTax Does Ask for 1095-C Details?
In very rare circumstances, typically if you're dealing with specific scenarios like:
You declined employer-sponsored coverage and then obtained a Premium Tax Credit from the marketplace (which is usually disallowed if affordable employer coverage was available).
You received multiple 1095-Cs from different employers throughout the year.
Even in these cases, TurboTax will prompt you with specific questions related to the details on your 1095-C. Follow the on-screen instructions carefully. However, for the vast majority of users, simply confirming coverage is all that's required.
Frequently Asked Questions (FAQs)
Here are 10 common "How to" questions related to Form 1095-C and TurboTax:
How to Check if I Need to Enter 1095-C in TurboTax?
Generally, for federal taxes, you do not need to directly enter Form 1095-C. You only need to confirm if you had health coverage. If TurboTax specifically asks for details from a 1095-A (Health Insurance Marketplace Statement), that's a different form entirely.
How to Find the Health Insurance Section in TurboTax?
In TurboTax Online/Mobile, use the search bar for "1095-C" or "health insurance." In the Desktop version, navigate to "Federal Taxes" then "Deductions & Credits" and look for the "Health Insurance" section.
How to Handle Multiple 1095-C Forms?
If you received multiple 1095-C forms (e.g., from changing jobs), simply confirm your coverage for the entire year (or specific months, if there were gaps) when prompted by TurboTax. You usually don't need to enter each individual 1095-C.
How to Correct a Mistake if I Already Entered 1095-C Information Incorrectly?
If you mistakenly entered 1095-C details in a section meant for 1095-A, go back to the health insurance section in TurboTax. Look for the option to delete or edit previously entered forms, specifically any mistakenly created 1095-A entry. Re-answer the questions carefully.
How to Know if My State Requires 1095-C Information?
While the federal government no longer assesses a penalty, some states (like Massachusetts, New Jersey, Rhode Island, Vermont, and the District of Columbia) still have individual health insurance mandates. TurboTax will guide you through any specific state requirements in the state tax section of your return.
How to Get a Copy of My 1095-C if I Lost It?
Contact your former or current employer's HR or benefits department. They are required to provide you with a copy.
How to Reconcile Premium Tax Credit if I Have a 1095-C and a 1095-A?
If you had employer coverage (1095-C) but also enrolled in a Marketplace plan with a Premium Tax Credit (1095-A), you'll need to accurately enter the 1095-A information. The IRS will use your 1095-C to determine if you were eligible for the Premium Tax Credit, as affordable employer coverage can sometimes disqualify you. TurboTax will guide you through this complex scenario.
How to Understand the Codes on My 1095-C?
Part II of Form 1095-C contains codes (Line 14 and Line 16) that explain the offer of coverage and the employee's enrollment. While you generally don't enter these codes into TurboTax, they provide detailed information if you ever need to verify your coverage history. You can find explanations for these codes on the IRS website or in the instructions for Form 1095-C.
How to Proceed if My 1095-C Information is Incorrect?
If you find errors on your 1095-C (e.g., incorrect dates of coverage or personal information), immediately contact your employer's HR or benefits department to request a corrected form.
How to Know the Difference Between 1095-A, 1095-B, and 1095-C?
1095-A: Health Insurance Marketplace Statement - for coverage purchased through a federal or state marketplace. This form must be entered into TurboTax.
1095-B: Health Coverage - issued by insurance providers (like health insurance companies or government agencies) for non-marketplace coverage (e.g., small employer plans, COBRA, Medicaid, Medicare). You do not typically enter this into TurboTax for federal returns, but keep it for your records.
1095-C: Employer-Provided Health Insurance Offer and Coverage - issued by Applicable Large Employers (ALEs). You do not typically enter this into TurboTax for federal returns, but keep it for your records.
By following these steps and understanding the purpose of your Form 1095-C, you can confidently navigate your tax filing with TurboTax!