Volunteer Income Tax Assistance (VITA) Certification Practice Test

If Teresa did not have Minimum Essential Coverage (MEC) for two months, what is her obligation on her tax return?

1. Pay a fine for the coverage gap

2. Complete Form 8965

3. No action required

4. Claim a credit

The correct answer is: Complete Form 8965

In this scenario, if Teresa did not have Minimum Essential Coverage (MEC) for a period of two months, her obligation on her tax return involves completing Form 8965. This form is used to report a short coverage gap and to claim an exemption from the individual shared responsibility payment, which was part of the Affordable Care Act's requirements. When individuals did not maintain MEC, they were generally required to reconcile their coverage status on their tax return, and Form 8965 served as the means to do this. It allows taxpayers to indicate that they experienced a short gap in health coverage — for example, if Teresa had coverage for ten months of the year but had a forbearance during two months, she would utilize this form to demonstrate that her situation was temporary. While the obligation to pay a fine for the coverage gap could have been true in certain years when penalties were imposed, the mechanism to address the issue during tax filing was specifically outlined through Form 8965. This form facilitated the process of reporting coverage gaps and mitigating any potential penalties, thus highlighting its significance in the context of Teresa's tax return.