Instructions for Form 8965 Checklist — 2014 Tax Year
Form 8965 reconciles individual shared responsibility payment liability under the Affordable
Care Act for 2014. Taxpayers use this IRS form to report health insurance coverage for themselves, their spouse, and qualifying dependents for each month of the tax year. The 2014 tax year represents the first year taxpayers must file Form 8965 and claim applicable coverage exemptions or calculate shared responsibility payment amounts owed, as the individual shared responsibility provision began January 1, 2014.
Filing Requirements and Household Membership
You must file Form 8965 if you experienced a gap in qualifying health coverage for one or more months during 2014 and do not qualify for a coverage exemption. Qualifying coverage includes employer-sponsored coverage, Medicare, Medicaid, the Children's Health Insurance Program,
Veterans coverage, or plans purchased through the Health Insurance Marketplace.
Report yourself, your spouse if filing jointly, and all qualifying dependents claimed on your 2014 tax return. A qualifying dependent must be someone you can claim as a dependent and who is a U.S. citizen, national, or resident alien.
Documentation and Coverage Reporting
Begin by collecting records that show what type of health insurance coverage applied to each household member for every month of 2014. Acceptable documents include insurance ID cards, coverage explanations, or statements issued by the Health Insurance Marketplace.
Use Form 8965 to record monthly coverage by completing the coverage grid for each individual from January through December 2014. Indicate months with qualifying coverage and clearly note months without coverage.
Because IRS guidance requires a separate grid for every person listed on the return, additional household members must be reported on separate grids or continuation sheets. Under the 2014 rules, any month in which a person had at least one day of minimum essential coverage is treated as a fully covered month for shared responsibility payment purposes.
Coverage Exemptions and Required Documentation
Claim a coverage exemption if you or a household member qualifies, reporting the exemption code and the months it applies. The 2014 Form 8965 instructions identify exemptions, including hardship exemptions granted by the Marketplace, American Indian tribal member status, incarceration following disposition of charges, membership in a recognized religious sect, and low-income exemption when household income falls below the filing threshold.
Each exemption applies only to the specific months during which the qualifying condition existed. Coverage exemptions that may be granted for less than a full tax year apply in all months in which an individual was eligible for at least one day.
Attach proof of eligibility for exemptions claimed on Form 8965. Acceptable documentation includes court documents for incarceration, tribal membership cards, or hardship claim letters from the Marketplace. If you received an Exemption Certificate Number from the Marketplace in
2014, include that number on the form in the designated column. The IRS may disallow exemption claims lacking proper documentation and recalculate the shared responsibility payment accordingly.
Calculating the Shared Responsibility Payment
Months without qualifying health coverage or an approved exemption trigger a shared responsibility payment on Form 8965. For each uncovered month, the fee is calculated using either a flat dollar amount per person or a percentage of household income, with the higher result applying. For the 2014 tax year, the flat-dollar charge is $95 per adult and $47.50 per child, subject to a family cap of $285.
Household income also factors into the calculation through a percentage-based method. For
2014, the applicable rate is one percent of household income that exceeds the filing threshold.
Add together the monthly liability amounts for all household members who lacked coverage and did not qualify for an exemption to determine the total annual shared responsibility payment.
Report the final amount on Form 8965 and carry it over to Form 1040, Form 1040A, or Form
1040EZ as an additional tax. If advance premium tax credits or cost-sharing reductions were received through the Marketplace in 2014, those amounts must be reconciled separately using
Form 8962, Premium Tax Credit.
Filing Procedures and Deadlines
Attach Form 8965 to your complete 2014 income tax return. Do not file this IRS form separately from your Form 1040, Form 1040A, or Form 1040EZ.
The primary taxpayer must sign and date Form 8965 in the designated signature block. Joint filers must ensure both spouses sign and date the form. A paid preparer may sign on behalf of the taxpayer if authorized, and must include their name, Employer Identification Number, and phone number in the preparer section. Assemble your return with Form 1040 first, then all schedules, Form 8965, and any other required tax forms.
File your Form 1040 with Form 8965 attached by April 15, 2015, or the next business day if that date falls on a weekend or holiday. Taxpayers needing additional time may file Form 4868 by the original due date to request an automatic extension.
Key Updates for Tax Year 2014
Form 8965 does not include reconciliation of advance premium tax credits, as that reconciliation occurs only on Form 8962, which represents a separate filing requirement introduced in 2014.
Form 8962 must be filed in addition to Form 8965 when applicable to properly report premium tax credit amounts and calculate any excess advance premium tax credit repayment obligations.
The flat-dollar amount of the shared responsibility payment increases annually. For 2015, the amount rises to $325 per adult and $162.50 per child. For 2016, the amount rises to $695 per adult and $347.50 per child. The 2014 Form 8965 instructions include newly issued IRS guidance on hardship exemptions and American Indian tribal member exemptions that differ from subsequent years' interpretations.
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