In response to a prior tax year filing, the IRS sent me a letter starting with 'this is not an audit, but we may examine your return in the future', and proposed to change my filing, disallowing the health insurance tax credit. My income for 2020 was very low so I didn't file a return that year. Then I realized I may be able to file and claim the tax credit, which was about $5,000. My mother had been paying for my premiums each month and I wasn't paying attention to it. After she died I filed this year for 2020 and eventually received the letter.
They are saying they want to disallow the tax credit because there is no record of me enrolled in a Health Insurance Marketplace. However, I was enrolled in Covered California that year. I can contest their proposal, and send them a copy of my 1095-A tax form from the Covered California website, but I'm hesitant to do that because the tone of the letter was somewhat threatening. Also, because my income was so low that year I possibly should have been enrolled in MediCal. When I filed my taxes this year the credit was accepted and I received a refund. I've read that the IRS doesn't like to give this type of credit for prior years. My inclination is to not respond to the letter, and just go along with the adjustment but any input would be appreciated.
