Zero income for 2016, but received "Obamacare" subsidies. I have no claims, no medical expenses, and paid the monthly premiums. Will I have to refund the government?

[ctshivalst306]

I am self employed, but have zero income for all of 2016, I'm an idiot at this sort of thing, and stupidly took a bookkeeper's wrong advice to not report my change of income to Covered California since I did not know how much money I'd be making from month to month. I was unaware that I was only eligible for MediCal. So I received "Obamacare" subsidies for 2016. I have no claims, did not have any medical expenses, how do I correct this? I won't be filing income tax, will I have to repay the government for the subsidies received?

[TaxGuyBill · Accepted solution]

Yes, because you were eligible for Medi-Cal, you will need to repay part of the Advance credit that you received.  Because of having no income, your repayment will be limited to $300 ($600 if Married).

As Critter pointed out, you *DO* need to file a tax return because you will be receiving the 1095-A from Covered California.

When you enter your 1095-A into TurboTax, you need to enter ZERO in column B (the SLCSP) for each month.  Do not put whatever number is on the 1095-A.  You need to enter zero because you were eligible for Medi-Cal.

TurboTax may give you an error with that, so you may need to mail your tax return rather than e-filing it.

[ctshivalst306]

Many, many thanks.

[Critter]

Well you have to file a return since you will be getting a 1095-A from the ACA in January.  To get the TT program to populate a return for this purpose simply enter $1 of interest income (just enter "bank" for the payer. 

You should use one of the FREE programs if you haven't paid for the program already...

TurboTax does have 2 free products--the regular Free Edition and the FREEDOM Edition.

  The regular Free Edition is for simple 1040A or 1040EZ returns only. It is currently free for Federal and free for a State return during the "Absolute Zero" promotion.   Later in filing season (usually sometime in March) a state return in that product will likely be 29.99.   It is located at:

https://turbotax.intuit.com/personal-taxes/online/free-edition.jsp

TurboTax also has another free product called the FREEDOM Edition (not to be confused with the regular Free Edition). It has free Federal preparation AND free State preparation. There is no efiling fee.  It will not go online until mid-January 2017.

The Freedom Edition is more fully-featured than the regular Free Edition. The Freedom Edition can prepare Schedule A, C, D, E, and F that the Free Edition cannot. It will prepare a Form 1040 or 1040A or 1040EZ.

For Freedom Edition a user needs to meet only ONE of these qualifications.
(NOTE: These were the 2015 requirements; the amounts could change slightly for 2016 returns.)

• AGI of $31,000 or less
• or active duty military (including Reservists and National Guard) with a military-issued W-2 and a 2016 family AGI of $64,000 or less
• or eligible for EIC (Earned Income Credit.)

The FREEDOM Edition will be located at:
https://turbotax.intuit.com/taxfreedom

[ctshivalst306]

Thank you so much!