IRS to Modernize 1095-A Tax Form Distribution for 17 Million Americans
The IRS is set to modernise its process for distributing 1095-A tax forms, which detail the premium tax credit (PTC) received by around 17 million Americans. Currently, the paper-based system is slow, costly, and error-prone. The move aims to align with the digital age, where other tax forms like W-2s and 1099s are already available online and in machine-readable formats.
The IRS and the Department of Health and Human Services (HHS) are working together to provide the PTC information in a machine-readable electronic format for tax preparers. This will enable automated data entry, similar to the process used for other tax forms. Last year, 124 million individual income tax returns were filed electronically in the US, highlighting the need for this update.
The Affordable Care Act introduced the PTC in 2014 to help low- and moderate-income individuals afford health insurance. However, the process of sending information from one government agency to another, with individuals acting as intermediaries for data entry, is inefficient. If government agencies do not digitise this data willingly, Congress may intervene to automate the tax preparation and filing process further.
The shift to a more digital and automated system for PTC tax form data will improve efficiency, reduce errors, and save time for both tax filers and preparers. It aligns with the broader trend of digital transformation in tax preparation and filing, benefiting the 17 million Americans who receive the PTC annually.
