7

So I just got my taxes completed, and did some searching on the net. Turbo Tax asked me where I got my health insurance. I clicked the box entitled at work, and all was good nothing further was needed.

I figured there would be an annotation on the W-2 that indicated this, but I did not notice anything. In my case, both myself and wife as well as some of our adult children are covered on her plan. All those that are covered should be indicated on her W-2. Even if some of the adult children are covered, they would not have access to our W-2, so that also seems to leave a gap. So my questions are:

  1. Is there something on the W-2 that I am missing?
  2. Is it possible for someone to just say they got HI at work to avoid the penalty?
  3. Is there some massive information exchange going on between the health care companies and IRS that involves SSNs that makes fraud on question 2 easier to detect?
7

For 2014, you will not get explicit documentation indicating your coverage. However, for 2015 (filing in 2016 calendar year), you should. From the IRS Health Coverage information page that Pete linked originally:

This year [2014], unless a taxpayer purchased coverage from the Marketplace, many people will not receive tax information documents related to their health coverage. Next year, however, people who have qualifying health care coverage will receive tax information documents that are comparable to Forms W-2 and 1099. Individuals that purchased coverage through the Health Insurance Marketplace, should receive Form 1095-A, Health Insurance Marketplace Statement by early February.

As littleadv noted, Box 12 code DD on your W-2 (or in your case, your wife's W-2) will show the health insurance premium paid on your behalf by your employer, and your own insurance premiums also show up as exclusions in line 14. This won't say who the coverage was for or if it was explicitly valid, though, for TY 2014.

5

Is there something on the W-2 that I am missing?

Yes, code DD on line 12. This is the cost of your coverage as the employer must report to the IRS. Based on the amount, it can be reliably estimated whether the coverage is for a single person or a couple/family.

Is it possible for someone to just say they got HI at work to avoid the penalty?

Sure. Just as it is possible for someone to say they earned nothing and not pay any tax. Possible doesn't make it legal, and if you get caught you can get charged with criminal tax fraud. Remember - there's no statute of limitation on tax fraud.

Is there some massive information exchange going on between the health care companies and IRS that involves SSNs that makes fraud on question 2 easier to detect?

Yes. Check form 1095. Those that get covered at work have the DD code on W2.

  • Exactly. You can say anything you want on your tax return. Doesn't mean you won't get in trouble for it. :) (You might want to add a bit about what line DD means, by the way - it's obvious to me but might not be to some.) – Joe Feb 23 '15 at 17:45
  • Given the documentation of other things that deal with the IRS; the proof, audit, and manpower required to "catch" these fraudsters might cost more then the $95 collected had they told the truth. It is just really weird to me how this law involves the IRS. – Pete B. Feb 24 '15 at 13:30
  • @PeteBelford it's really not complicated, a matter of simple matching. This kind of fraudsters should be caught automatically without any manpower at all. Except for the Republicans not allowing the IRS to do that. – littleadv Feb 24 '15 at 16:46

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