More on the hardship exemption from health reform’s individual mandate: Folks must nail down this exemption before filing. In our Oct. 10 Tax Letter, we noted that people without health insurance will owe a tax when they file for 2014 unless they have an exemption. Those seeking one of the 14 hardship exemptions must get an OK from the exchange before they can claim a waiver on their returns. The approval process will take a minimum of two weeks, according to the government.
Individuals must submit a multiple-page application plus required documentation. If the exchange OKs the relief, the applicant will receive a certificate number that he or she will then enter on Form 8965 to substantiate the claimed exemption.
Waiting too long to apply will likely delay your refund, especially if the feds end up being swamped by procrastinators who are unfamiliar with the exemption rules. Note that hardship exemptions won’t necessarily be granted for the full year. They’re usually given for the months of the hardship plus one month before and after.