Do You Need Form 1095-C to File Taxes? Avoiding Confusion
Nov 3, 2025
Do You Need Form 1095-C to File Taxes? Avoiding Common Client Confusion
As a financial advisor, you often encounter clients asking whether Form 1095-C is required to file taxes. Form 1095-C is an informational document employers provide to report the health insurance coverage offered to full-time employees under the Affordable Care Act (ACA).
While the form contains important details about coverage, clients generally do not need it to file their tax return. Understanding this distinction helps advisors prevent unnecessary confusion and ensures clients focus on the information that actually affects their taxes.
When Clients Might Think They Need Form 1095-C
Clients often worry about missing tax documents, and Form 1095-C is no exception. Common scenarios include:
Expecting penalties for missing coverage: Some clients believe that without the form, the IRS will automatically assess an ACA penalty.
Confusion with Form 1095-B: Clients may not differentiate between 1095-B (insurance providers) and 1095-C (employers).
Incomplete employer reporting: Sometimes clients receive the form late or with errors, leading to stress around tax filing deadlines.
As an advisor, clarifying that the form is informational and that filing can proceed without it is critical.
What Advisors Need to Know
Advisors guiding clients on Form 1095-C should focus on these key points:
Verification, Not Filing: The IRS uses the form to confirm that clients had qualifying health coverage. However, clients typically don’t attach the form to their return.
Alternative Proof: If clients haven’t received Form 1095-C, other documentation such as W-2s or pay stubs showing coverage can be sufficient.
Employer Responsibility: It’s the employer’s duty to provide accurate forms. Advisors should advise clients to request corrections if errors exist.
State Variations: Some states have their own reporting requirements, so advisors should be aware of local regulations affecting clients.
Common Misconceptions to Address
Financial advisors should proactively clear up client confusion about Form 1095-C. Common misconceptions include:
“I can’t file without it.” Clients can file using other proof of coverage; the form itself is informational.
“The IRS needs the form attached.” The IRS does not require submission; keep it for records.
“No form means I owe a penalty.” As long as the client had minimum essential coverage, penalties typically do not apply.
“Errors on the form invalidate my filing.” Mistakes should be corrected with the employer, but clients can file timely returns with other coverage documentation.
Advisors who address these misconceptions reduce anxiety and improve client confidence.
How Advisors Can Add Value
Financial advisors play a key role in helping clients navigate ACA reporting:
Proactive Communication: Explain early in the year what forms clients will receive and what they need for filing.
Record-Keeping Guidance: Encourage clients to maintain documentation of coverage, including pay stubs or employer letters.
Coordination With CPAs: Partner with tax professionals to ensure all coverage reporting is accurately reflected without delaying filing.
Year-Round Planning: Integrate ACA considerations into overall financial and tax strategies to avoid last-minute issues.
Strategic Considerations for Clients
Beyond clarifying filing requirements, advisors can use Form 1095-C discussions to inform broader tax planning:
Impact on Premium Tax Credits: Correct coverage verification helps clients preserve eligibility for premium subsidies.
Timing Deductions and Contributions: Coordinating healthcare savings accounts or medical expense deductions may depend on coverage verification.
Client Education: Teaching clients to understand Form 1095-C reduces panic and strengthens the advisor relationship.
By framing these points as opportunities for planning, advisors provide tangible value beyond tax season.
Final Thoughts
For financial advisors, understanding whether clients need Form 1095-C to file taxes and being able to explain it clearly is essential. By clearing up misconceptions, offering record-keeping guidance, and coordinating with tax professionals, advisors ensure clients remain compliant and confident in their filings.
Let’s talk about how Jalada can help your advisory practice integrate accounting and tax solutions for seamless client support.
Disclaimer: This material is provided for informational purposes only and does not constitute tax advice. Consult a qualified tax professional or CPA for guidance on the specific tax situation.
