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U.S. Expats: Avoid Obamacare Tax Penalty By Filling This Form

U.S. Expats: Avoid Obamacare Tax Penalty By Filling This Form

The Affordable Care Act will impact US taxpayers for the first time in the fiscal year 2014, for which US income tax returns are filed in 2015. Americans living overseas should be aware of the important need to attach a completed Form 8965 to their 1040. Form 8965 allows you to describe your status as an overseas resident, which indicates to the IRS that you benefit from deemed covered status by a foreign health plan and do not need to participate in a US plan. If you do not attach Form 8965, you may be subject to the penalty for not having US health coverage. Click here to see a detail of potential penalties.

US citizens living abroad are subject to the individual shared responsibility provision under the Affordable Care Act. However, US citizens who are NOT physically present in the United States for at least 330 full days within a 12-month period are treated as having minimum essential coverage for that 12-month period regardless of whether they enroll in any healthcare coverage. Click here for a description of minimum essential coverage.

US citizens who are bona fide residents of a foreign country for an entire taxable year are treated as having minimum essential coverage for that year.

Individuals may qualify for this rule even if they cannot use the Section 911 exclusion for all of their foreign earned income because, for example, they are employees of the United States Government. Individuals who qualify for this rule need take no further action to comply with the individual shared responsibility provision during the months when they qualify. They will report their status with their federal income tax return on Form 8965.

US citizens who do not meet the foreign physical presence or foreign residency requirements must have essential coverage, or qualify for a coverage exemption, or make an individual shared responsibility payment when they file their federal income tax returns.

Readers should note that this article is only intended to convey general information on these issues and that FAS CPA & Consultants (FAS) in no way intends for the contents of this article to be construed as accounting, business, financial, investment, legal, tax, or other professional advice or services. This article cannot serve as a substitute for such professional services or advice. Any decision or action that may affect the reader’s business should not rely solely on the contents of this article, but should rather be consulted on with a qualified professional adviser. FAS shall not be responsible for any loss sustained by any person who relies on this presentation. This article is subject to change at any time and for any reason.

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Fulton Abraham Sanchez, CPA

Fulton Abraham Sánchez, CPA I am Certified Public Accountant, specialized in Tax Planning & Offshore Strategies for Real Estate, Hedge/Equity Funds, Fintech, Crypto, Expats, IRS Debt Resolution. You can email me fa@fascpaconsultants.com and follow us on Facebook : FAS CPA & Consultants.

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