ez1095: Common Mistakes and How to Avoid ThemFiling tax forms can be stressful, and the ez1095 form (or tools labeled ez1095 that help prepare Form 1095-B or 1095-C) is no exception. This article outlines the most common mistakes people make when completing ez1095-related paperwork, explains why those mistakes matter, and gives clear, actionable steps to avoid them. Use this as a checklist while preparing or reviewing your 1095 forms.
What ez1095 typically covers
Many services or software labeled ez1095 help employers, insurers, and individuals prepare and distribute the IRS-mandated health coverage forms:
- Form 1095-B: Provided by insurers or small employers to report individuals’ minimum essential coverage.
- Form 1095-C: Provided by applicable large employers (ALEs) to report offers of employer-sponsored coverage.
Knowing which form you need is the first step—using the wrong form is a frequent source of later confusion.
Mistake 1 — Using the wrong form or filing path
Why it happens:
- Employers or individuals confuse 1095-B with 1095-C.
- Software defaults or templates are selected incorrectly.
Why it matters:
- Filing or distributing the wrong form can trigger IRS notices, delays in recipients’ tax filings, and extra work to correct filings.
How to avoid:
- Confirm whether you are an ALE (50+ full-time employees including full-time equivalents) — ALEs generally use 1095-C; insurers and smaller employers use 1095-B.
- Review your software/service settings to ensure it’s set to produce the correct form type.
- If unsure, consult your payroll department, health insurer, or a tax pro.
Mistake 2 — Incorrect or incomplete recipient information
Why it happens:
- Typos, outdated addresses, incorrect Social Security numbers (SSNs), or missing taxpayer identification numbers (TINs).
- Relying on employee-provided data without verification.
Why it matters:
- Incorrect SSNs or TINs cause IRS matching failures and can lead to penalties.
- Returned mail prevents recipients from receiving needed documentation.
How to avoid:
- Verify SSNs/TINs against W-2 records, Form W-4, or government-issued IDs.
- Use current employer records and encourage employees to update personal info before year-end.
- For addresses, use postal validation tools or confirm during benefits enrollment.
Mistake 3 — Wrong coverage months or codes
Why it happens:
- Miscounting months of coverage, especially if coverage began or ended mid-year.
- Using incorrect offer or coverage codes on 1095-C (codes are detailed and numerous).
Why it matters:
- Incorrect month reporting affects individual tax returns and ACA compliance records.
- Wrong codes can misrepresent an employer’s offer of coverage and affect IRS assessments.
How to avoid:
- Keep accurate, month-by-month records of coverage start/end dates for each employee.
- Use payroll or benefits admin systems that track coverage eligibility by month.
- Refer to the IRS instructions for the correct codes, and keep a cheat-sheet of commonly used ones.
Mistake 4 — Filing late or missing electronic filing thresholds
Why it happens:
- Underestimating the time needed to prepare, validate, and submit forms.
- Not realizing that electronic filing is mandatory above certain volumes (250 or more forms historically; check current IRS thresholds).
Why it matters:
- Penalties for late filing or for failing to file electronically when required.
- Recipients might not have forms in time for their tax filings.
How to avoid:
- Start early: prepare data during the fourth quarter and validate in January.
- Check current IRS deadlines and electronic filing thresholds (these can change).
- If you exceed the electronic threshold, choose a provider or software that supports e-filing.
Mistake 5 — Not validating the file before submission
Why it happens:
- Skipping validation steps to save time.
- Unfamiliarity with IRS AIR (Affordable Care Act Information Returns) system and its rejection messages.
Why it matters:
- Rejected submissions delay compliance and can push filings past deadlines.
- Repeated re-submissions increase workload and stress.
How to avoid:
- Run built-in validation tools in your software to catch format and data errors.
- Use the IRS AIR test environment (or vendor equivalents) to check file structure.
- Review rejection codes carefully and fix root causes before resubmitting.
Mistake 6 — Failing to distribute correct copies to recipients
Why it happens:
- Sending draft versions, sending to incorrect addresses, or failing to provide recipient copies at all.
- Assuming electronic delivery is acceptable without recipient consent.
Why it matters:
- Individuals need their 1095 to reconcile health coverage on their tax return; lack of a copy can cause confusion and missed credits or penalties.
- Some recipients require paper copies; electronic delivery has consent requirements.
How to avoid:
- Confirm delivery addresses and postal delivery methods; obtain consent for electronic delivery per IRS rules.
- Keep proof of distribution (postage receipts, electronic delivery logs).
- Provide corrected copies promptly if errors are found.
Mistake 7 — Incorrect employer identification or contact info
Why it happens:
- Using obsolete EINs, company names, or contact phone numbers because of mergers, acquisitions, or rebranding.
- Data entry mistakes.
Why it matters:
- Mismatched employer identification can cause IRS processing errors and misrouting of correspondence.
How to avoid:
- Confirm your EIN and legal name with payroll and tax records for the year being reported.
- If your company changed status (merged, acquired), consult a tax advisor about correct filing.
Mistake 8 — Not keeping sufficient records for corrections
Why it happens:
- Minimal retention policies or ad-hoc record-keeping.
- Assuming digital copies in one location are enough without backups.
Why it matters:
- Corrections (corrected Forms 1095-B/1095-C) require tracing original data; poor records increase time and chance of error.
- Audit defense requires showing original filings and the correction rationale.
How to avoid:
- Keep year-end snapshots of enrollment, payroll, and benefits records for several years (follow IRS retention guidance).
- Store files in secure, backed-up systems and maintain a corrections log.
Mistake 9 — Misunderstanding who must receive a 1095
Why it happens:
- Confusion over employee status (seasonal, part-time, terminated mid-year), dependents, and household members.
Why it matters:
- Failing to provide forms to eligible individuals may result in compliance issues; providing forms to ineligible people creates confusion.
How to avoid:
- Define and document eligibility rules for your organization: who counts as full-time, who gets coverage reporting, and treatment for dependents.
- Coordinate between HR, payroll, and benefits teams to align rosters.
Mistake 10 — Overlooking state-specific requirements
Why it happens:
- Focusing only on federal rules and missing state mandates (some states have their own reporting requirements or timelines).
Why it matters:
- Noncompliance with state rules can result in separate penalties or additional filings.
How to avoid:
- Check state health coverage reporting requirements for states where you operate.
- If operating in multiple states, confirm multi-state rules with a tax advisor or your software vendor.
Practical checklist before filing
- Confirm whether 1095-B or 1095-C is required.
- Verify all SSNs/TINs, names, and addresses.
- Validate month-by-month coverage and correct codes.
- Run software validation and, where required, submit electronically through AIR.
- Print or deliver recipient copies and retain proof of distribution.
- Keep organized records and a corrections log for at least several years.
Sample correction workflow (short)
- Identify error and affected recipients.
- Create corrected 1095 with correct data and mark as “CORRECTED.”
- Re-file with IRS per instructions and re-distribute corrected recipient copies.
- Log the correction: reason, date, files changed, and communications sent.
Final notes
Staying organized, starting early, and using validation tools reduce most ez1095-related errors. When in doubt, consult your payroll/benefits administrator or a tax professional experienced with ACA reporting.
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