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Question

How do I amend a 2014 tax return to take the Health Coverage Tax Credit on Form 8885?

Answer

Form 8885 was not available for 2014 because the Health Coverage Tax Credit (HCTC) expired. The tax credit was retroactively reinstated for 2014 when the Trade Preference Extension Act was signed on June 29, 2015. To claim the HCTC in 2014, you must file a 2014 tax return without the HCTC (even when no other filing requirement applies) and then amend the return to claim the HCTC. In Screen Amend, Explanation of changes, indicate that the taxpayer is electing the HCTC and enter the month in which the election begins. The election will be in effect for the remainder of the year. See Completing amended returns in UltraTax (1040) for details on how to amend a return.

In the 2014 tax application, amend the 2014 return by adjusting all other affected items. For example, insurance premiums claimed for HCTC must be subtracted from medical expenses on Schedule A or from the self-employed health insurance deduction, if applicable.

You cannot take the Premium Tax Credit (PTC) on Form 8962 for the same coverage you elect for the HCTC. If the HCTC is elected for all insurance premiums, enter X in the Taxpayer does not qualify for Premium Tax Credit (Force) field in Screen ACA Cr. If the HCTC is elected for some months but not all, delete the amount in the Monthly SLCSP Premium field in Screen ACA Cr-2 for the months electing HCTC, and then enter 0 (zero) in the Repayment limitation (Force) field in Screen ACA Cr (since no repayment limitation applies). When you follow these steps, Form 8962 will recalculate correctly for the amended return. Note that once the HCTC is elected for a given month, the election remains in effect for all remaining months of the year.

Since Form 8885 does not exist for 2014, you must use the 2013 version, which you can print from IRS.gov or from the 2013 tax application. At the top of the form, cross out "2013" and write "2014" in large, bold numbers. The form can be filled out using either overrides or the fillable PDF at https://www.irs.gov/pub/irs-prior. You must manually calculate the HCTC on Form 8885.

To override Form 1040X, enter X on line 15, Refundable credits from: 8885, and use the attached text to print "HCTC" in large, bold letters at the top of Form 1040X. See Attaching text to a form for details on how to use attached text. When all other changes have been made on the amended return, add the calculated credit on Form 8885 to the net change on Form 1040X, line 15, column B, and override the form with this refigured amount. Also overide line 15, column C, with the sum of columns A and B. These overrides carry through the remainder of Form 1040X.

When assembling and mailing the amended return, be sure to write "HCTC" in large, bold letters at the top of Form 1040X, page 1, and attach a copy of the official letter of eligibility from the PBGC, Department of Labor, or your state workforce agency or employment office. Also attach proof that the health insurance plan was qualified and that the taxpayer paid the qualified health insurance premiums.

Mail the completed Form 1040X and Form 8885, supporting documents, and Form 8962 (if required) to the following address, regardless of where the taxpayer lives.

   Department of the Treasury
   Internal Revenue Service
   Austin, TX 73301-0215

If using a Private Delivery Service, the address is the following:

   Internal Revenue Service
   3651 South I-H 35, Stop 6055 AUSC
   Austin, TX 78741

For more information, see the IRS website regarding the HCTC at https://www.irs.gov/Individuals/HCTC-2014-Form-1040X.

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