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The IRS 1099 Forms for Mcare Refunds Have Been Mailed

The IRS Form 1099 has been mailed to health care professionals and others who received an Mcare refund check. Mcare refunds received by health care professionals and others may have tax implications.

Please see our Quick Consult on the Legal Issues Impacting Mcare Refund Assignment and Claim Decisions for detailed information on your tax and reporting obligations. A short summary of your potential tax and reporting obligations, as described in the FAQ section of the consult, is provided below. This information focuses on federal tax law.*  

If you have questions regarding the IRS 1099, please contact Mcare: 717-783-3770, option 1.

What did you do with your refund?

 

What is your tax obligation?  obligation to pay taxes

 

What is your reporting obligation for payments to
3rd parties?

     

You accepted your Mcare refund…

 

 

Your payment will normally be considered gross income that must be reported on your income tax return.

 

N/A


 

You accepted your Mcare refund, but later paid all or some of refund to the person or entity that paid the assessment…

 

Your payment will be considered gross income that must be reported on your income tax return.

You would report gross income in the full amount of the refund and take a business tax deduction for the amount paid to the person or entity.

If you paid the full amount of the refund to the assessment payor in the same year as the refund payment, the resulting deduction may offset the additional reported gross income – resulting in no tax payment on the refund amount. However, the end result will depend on your tax profile.

 

You may be required to comply with the 1099 Form reporting requirement and should consult a tax advisor as to whether any exception applies.


 

You directed Mcare to pay the refund directly to your assessment payor via assignment or claim process…

 

You likely will not be required to report that payment as income.

If you had a legal obligation to pay your refund directly to your assessment payor, you likely will not be required to report the refund amount as gross income.

HOWEVER, if you had no legal obligation to make the assignment, your payment will likely be considered gross income that must be reported on your income tax return.

 

You almost certainly do not have a reporting obligation, provided there was a legal requirement to make the assignment.


 

You received your Mcare refund check and later endorsed the check to an assessment payor…

 

You will most likely not need to declare the refund as income, provided that the assessment payor is legally entitled to the refund.

 

You may be required to comply with the 1099 Form reporting requirement and should consult a tax advisor as to whether any exception applies.


 

*Please note that Pennsylvania tax law is comparable to federal tax law in most but not all respects.


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