Health Care Mandate March 2022 Tax News

Avoid Health Care Mandate penalties

Effective January 1, 2020, state law requires California residents to obtain and maintain qualifying health insurance throughout the year. Franchise Tax Board (FTB) is aware that some taxpayers who had qualifying health coverage may have been assessed an Individual Shared Responsibility (ISR) Penalty on their 2020 tax returns.

The 2021 Form 540, and instructions, have been updated to emphasize that taxpayers should “check the box” on Line 92 if they had qualifying health care coverage for all months of 2021. This includes qualifying health coverage for the taxpayer, spouse, and all dependents claimed on the tax return. In addition, the 2021 Form 540, and the instructions for Line 92, have been updated to state that Medicare Part A or Part C coverage is qualifying health care coverage.

If taxpayers had qualifying health coverage during the year and receive a notice relating to the ISR Penalty, they should respond to the notice with proof of health care coverage.

For more information visit Health Care Mandate.