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California Individual Shared Responsibility penalty in Lacerte

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California Individual Shared Responsibility penalty in Lacerte

Starting in 2020, Californians who don't have health insurance and who don't qualify for an exemption are subject to pay an Individual Shared Responsibility penalty, or ISR. Form FTB 3853 will be used to claim an exemption or calculate the penalty amount.

You can use this calculator to estimate your clients' penalty amounts.

Where do I enter health coverage in Lacerte?

If your client receives Form 3895, Health Insurance Marketplace Statement:

  1. Go to the Details tab.
  2. Go to Screen 39, Premium Tax Credit (1095-A, 8962).
  3. Select California Form 3895 - Health Insurance Marketplace Statement from the left sections panel.
  4. Enter the applicable information.

Make entries on Screen 39.3 if your client had health coverage that wasn't purchased through the state marketplace, for example, they receive a 1095-B or 1095-C, or intends to claim an exemption. You only need to complete the sections of this screen that apply to your client.

Minimum Essential Coverage Not Indicated Elsewhere

Lacerte will use your entries in this section to determine whether the household had full year health coverage, provided they didn't receive Form 3895 from the marketplace.

  • If the entire household was covered for all months, enter a 1 in 1=entire household covered for all months, 2=no months. No other entries are needed to indicate full year coverage.
  • If only part of the household was covered, or if any individuals had partial year coverage, complete the Covered Individuals section.

Coverage exemptions

  • If your client applied for, and received an exemption certificate, complete the Marketplace Granted Coverage Exemptions (Form 3853, Part I) section.
  • To claim an exemption on the tax return, enter the exempt individuals' information in the Coverage Exemptions For Individuals Claimed on Returns (Form 3853, Part III) section.
    • Exemptions for a short coverage gap or a household member who was born, adopted, or died during the year will be automatically calculated with no input required here. However, to calculate exemption code A, coverage considered unaffordable, more information must be entered.
  • To calculate exemption code A, you'll need to enter data about the coverage that was available to your client, either through an employer or the marketplace, and how much the coverage would have cost. This data will be used to calculate plan affordability.

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