How the Affordable Care Act Can Affect Your Taxes
As you may already know, the Affordable Care Act states that individuals living in the US must maintain health insurance throughout the year.
If you choose to ignore this new law, you will be responsible for paying a penalty to the government, which starts fairly low in 2014 ($95 or 1% of your income per person), but will gradually increase in years to come.
You are asked to disclose whether you have health insurance on your tax return for the first time this year. So, this leaves many questions for taxpayers looking to file their returns this spring.
Will This Affect You?
While this definitely is a big deal for many Americans, it should be noted up front that it will not significantly impact everyone.
For example, if you have a job with employer-paid benefits and your entire family is on the same plan, you may not be impacted at all. All you will notice is that you need to check a box on your tax return indicating that you have health insurance.
Things get more complicated if you are not on an employer-paid plan and/or your entire family is not covered by the same plan.
If you are in compliance, you will have purchased health insurance from a market exchange and you will be asked to report the value of your health plan (rather than your employer reporting it).
The IRS in turn evaluates your coverage to determine whether you could receive tax credits, or if you owe penalties to the IRS.
Possible Tax Credits for Low Income Filers
Part of the Affordable Care Act acknowledges that many Americans may not be able to afford health insurance.
As a result, if you earn between 133% and 400% of the federal poverty level, you will likely be able to receive tax credits that will be able to help you pay for your required health insurance.
There are certain circumstances that may prevent you from obtaining medical insurance, which may qualify you for a hardship exemption.
If You Have Questions, Seek Support
Significant changes to tax law yield many questions and just as many legitimate exceptions to the new rule.
If you still have questions about whether the Affordable Care Act will impact your annual tax return, there is still time to seek help. You can look for additional online resources to calculate whether you may be exempt from purchasing health insurance, or you can seek help from a tax professional, whose job it is to keep current with tax law.
The most important thing is not to shy away from the changes and be tempted not to file (or pay if you owe). Your tax problems will only multiply if you do not face them head on.
Success Tax Relief has spent the last few years making sure our tax team knows how the Affordable Care Act will affect taxpayers like you.
We can help sort out your individual situation and make sure that your return is accurate and accounts for these new changes.
Give us a call today at 1-877-958-6638 and let us help you get started!