A taxpayer is only responsible for the Shared Responsibility Payment for those months in which they either had no insurance coverage or were not a member of a health care sharing ministry. This additional tax is calculated month-to-month on Form 8965.*
Line 61 on the 2016 Form 1040 is where you are to report the amount of the Shared Responsibility Payment you owe.
*If a person was covered or exempt for any day of a month, this status applies to the entire month.
CLAIMING YOUR EXEMPTION
If you claim an exemption from the Shared Responsiblity Payment tax as a member of a healthcare sharing ministry, you are also to report that exemption on Form 8965.
The IRS Instructions for the Form 8965 Worksheet asks for the code under which you are exempt. As a member of a healthcare sharing ministry you have a Code ‘D’ exemption. Your tax return will not ask for the name of the exempt healthcare sharing ministry.
On Form 8965, leave Parts I and II blank. In Part III, for each member of your household, you will simply write the letter ‘D’ in the column titled ‘Exemption Type’ for each month for which you claim the exemption.
Follow these basic steps:
Step 1: Calculate your 'Shared Responsibility Payment' on Form 8965
Step 2: Claim the months that you were a part of a healthcare sharing ministry as an exemption in Part III of Form 8965
Step 3: On line 61 of the 2016 Form 1040, report the 'Shared Responsibility Payment' you calculated on Form 8965
Example: If you had insurance coverage from January 31st to June 1st, and were then a Liberty HealthShare member from July 1st to the end of the year, the amount owed on Line 61 of Form 1040 would be ‘0’ (Zero).
If you have your taxes prepared by a professional tax accountant, they should be familiar with these requirements. If necessary, feel free to refer them to this post for instructions on properly filing your health coverage information.
If additional information becomes available, we will pass it along to our members.
Links to IRS Forms:
Click here: Form 1040
Click here: Form 8965
Click here: Form 8965 Worksheet