Okay people, this information is about how the health care act will affect your tax returns going forward. This post is going to be LONG but it is VERY important! Please.. READ it, UNDERSTAND it, SHARE it. I will do my best to explain what I know and to answer questions but I’m doing this for the first time also. The IRS is accepting tax returns starting on January 20th and once I’ve completed a few returns, I will have a better understanding of it all, but these are the main points. **For tax year 2014, (the year were getting ready to file), you will pay a penalty on your tax return if you did not have insurance at least 9 months of the year. (There are exceptions that I will get to in a minute.) The penalty is the HIGHER of: 1) flat fee of $95, plus $47.50 per child under 18, or 2) 1% of your household’s adjusted gross income that is above the tax filing threshold for your filing status. The threshold for single is roughly $10,000, married filing jointly is roughly $20,000, but these change slightly each year. **For tax year 2015, these fees will be raised to the higher of $325 per person, plus $162.50 per child under 18, or 2% of household income. They will raise in 2016 as well. An online calculator that will help you figure out your fee is found here: taxpolicycenter.org/taxfacts/acacalculator.cfm **You will not have to pay this fee if your income is low enough that you aren’t require to file a tax return, if you were incarcerated, if you’re a member of a federally recognized tribe, if you’ve suffered a hardship, and others. **Examples of a hardship are: being homeless, evicted or facing foreclosure, received a shut off notice from a utility company, recently experienced domestic violence, fire, flood, or substantial damage to property, if you filed bankruptcy in the last 6 months, have medical expenses you couldn’t pay in the last 24 months, caring for an ill, disabled, or aging family member, recent death of a close family member, and MORE! **Some of these hardships can be claimed at the time you file your tax return. But some must be filed ahead of time and when approved, you will be given an Exemption Certificate Number (ECN) to enter on your federal tax return. I strongly suggest you get some advice ASAP if you want to claim an exemption of penalty for 2014 or 2015. No matter where you live, there are people certified to help with this. If you hire or get advice from a tax professional and they are not a CPA or enrolled agent, make sure they are a registered tax return preparer with the IRS. You can enter as little as their last name on this site to verify that. ptindirectory/ **If you signed up for insurance on the Marketplace and were eligible for a tax credit, you had the choice of receiving the credit now (paid directly to your insurance company each month), or when you filed your tax return. If you chose to receive it during the year, you MUST file a federal income tax return, even if you are otherwise not required to file in order to figure your tax credit. **If you purchased coverage through Marketplace you should receive Form 1095-A, Health Insurance Marketplace Statement, by early February. This form has the information you will need to complete your taxes. Individual insurance companies are not required to start sending the 1095-A until next year... but if you do receive one in the mail, put it with your other documents like your W-2 and 1099’s. **One more important change for 2014 is if you bought insurance on the Marketplace you cannot file a 1040EZ form. If you prepare your own taxes online, you may still be eligible for a free file website, but must use one that prepares 1040 or 1040A. If you use a tax preparer, expect that most places will raise fees a little bit this year to allow for the extra time, research, and education involved with learning these new forms. More info about the penalties and exemptions of the penalties can be found here: https://healthcare.gov/fees-exemptions/fees-exemptions-overview/ **Last thing... if you file Married Filing Separately, you cannot take the premium tax credit. So if you signed up for insurance with a spouse, or as a family, and got tax credit payments in advance, you will have to repay some or all of those payments depending on the circumstances. Wow, I’m impressed!! You made it to the end of this very long and boring post. I tried very hard not to give any false information or confuse anyone, but this health care act has a lot of parts and we’re all still learning. Please be very careful in giving and receiving advice from others. Like anything with taxes, the numbers are going to change every year. Knowing the amounts or memorizing the information is not as important as knowing where to find the answer. If you got this far, like my status or type * in the comments to keep this post active and more people seeing it. Thanks all and Happy Tax Season!
Posted on: Sun, 18 Jan 2015 21:31:26 +0000