Daily Archives: January 1, 2015

Thanks Obamacare: 3 Tips for Filing Taxes

CMS (Center for Medicare and Medicaid Services) has come out with a helpful document titled: 3 Tips About Marketplace Coverage & Your Taxes

The tips are:

  1. Watch your mail for Form 1095-A. It will help you file your 2014 federal taxes.
  2. Your final premium tax credit for 2014 will be computed with your federal income tax return. Use Form 8962
  3. If you didn’t have health coverage for part of 2014, use Form 8965.

The complexity is mind boggling. If you are receiving a subsidy, say goodbye to Form 1040EZ. Have a problem, call your Washington legislatures.

Download (PDF, 165KB)




How Big is the ACA Tax Penalty?

Tax Facts | How Big is the ACA Tax Penalty?(<– click to access calculator)

The Affordable Care Act (ACA) requires most Americans to have health insurance starting in 2014. People who don’t comply have to pay a penalty, the amount of which depends on several factors, including income and family size. This calculator lets you estimate the potential ACA penalty for individuals and married couples who don’t have health insurance coverage required by the ACA.

Certain groups are exempt from the penalty tax (click for list).


Obamacare Penalty 2015

Obamacare Penalty 2015: Deadline Fines For No Health Insurance Makes For Lousy New Year’s Resolutions.

The 2015 Obamacare penalty is where the rubber really starts to hit the road. All Americans must report on their IRS income tax documents their health insurance status for 2014. This is when the IRS will begin to collect Obamacare fines from the uninsured unless they happen to quality for Obamacare exemptions, which includes financial hardship. TurboTax has created a free online tool called “Exemption Check” for people to see if they may qualify for a waiver.

For 2014, the Obamacare penalty is a minimum of $95 per person or one percent of household income if the latter value is greater than $95. The Obamacare fines will jump in 2015 to the greater of two percent of income, or $325. By 2016, the average fine will be about $1,100, although that depends on your income. The Obamacare penalty is also capped based upon the average premium for bronze level health insurance plans, and these maximum fines are projected to be $2,448 for 2014, $2,570 for 2015, and $2,699 for 2016.

As an example of the Obamacare penalty, we will use the Tax Policy Center’s Affordable Care Act penalty calculator. Assuming you are a single person making $50,000 for the year, the Obamacare penalty will be $399 for 2014, $824 for 2015, and $1,062 for 2016. In effect, being uninsured will cost almost half of the project bronze level health insurance plan for 2016.

Obamacare Penalty Calculator

How well educated is the public in regards to Obamacare deadlines and penalties?

Unfortunately, according to News 13, only around five percent of uninsured Americans know the Obamacare deadline for the enrollment period is February 15, 2015 nor do many know that the Obamacare penalty will be rising significantly this year.“We could be looking at a real train wreck after Feb. 15,” said Stan Dorn, a health policy expert at the nonpartisan Urban Institute. “People will file their tax returns and learn they are subject to a much larger penalty for 2015, and they can do absolutely nothing to avoid that.”

Does the public understand this? By the time they understand the ramifications of the penalty, it will be too late to fix it for 2015, when the penalty will be twice as large (or larger).




Coming soon to subsidy receivers: A more intimate relationship with the IRS

Obamacare Unleashes IRS on Americans | Policy Paper | Senate Republican Policy Committee.





The Penalty:

Early next year, the IRS will begin collecting revenue from Obamacare’s individual mandate tax penalty. Americans who fail to obtain insurance that complies with numerous Washington mandates – and who fail to qualify for an exemption from the individual mandate – face penalties of $95 ($285 per family) or one percent of household income, whichever is greater. To collect this penalty, the IRS will target people’s tax refunds.

Subsidy Reconciliation:

The IRS also plays a key role in implementing Obamacare’s complicated subsidy scheme. The health care law authorizes tax credits for people in households with income between 100 percent and 400 percent of the federal poverty level, who can’t get insurance through work or through a government program, and who reside in states that established their own exchanges. In 2012, the IRS issued an illegal rule that also extended these tax credits to people in states that use the federal exchange. (Ed note: The Supreme court will decide  if federal exchange subsidies are legal)

Form 8962 for subsidy reconciliation:

Form 8962 allows households that claim a premium tax credit to calculate the correct tax credit amount and the amount that will need to be reconciled. The form has 36 lines for entry and will require filers with any change in coverage during the year to fill in 72 boxes (six boxes per month). Altogether, Form 8962 has 95 boxes for entries for single filers and 133 boxes for entries for married filers with two dependents. People who previously used IRS’s short form (1040EZ) to file their return, and who receive credits this year, will need to switch to the more complicated long form (1040 or 1040A).

Instructions for Form 8962 consist of 15 pages of complicated terminology and worksheets that will take the average tax filer hours to understand, will be incredibly frustrating, and will undoubtedly result in many inaccuracies. . Because of the convoluted structure of Obamacare’s subsidy scheme, the instructions have to explain how tax filers should allocate tax credits under certain conditions and how they should correctly calculate tax credits if household size changes during the year, such as through marriage, divorce, birth of a child, or death of a family member. Despite their length, the instructions fail to provide directions for filers to figure out whether offered employer coverage satisfies Obamacare’s minimum essential coverage requirement.

Taxpayers who claim one of the 19 exemptions from the individual mandate must file Form 8965 with the IRS. As many as 23 million Americans may have to file a Form 8965 for the 2014 filing season. The form has 21 boxes for entries for single filers and 78 boxes for entries for married filers with two dependents. Instructions for Form 8965 take 12 pages and contain five worksheets. One tax expert told Politico, in an August 11 article, that the application requirements for some of the exemptions are “hopelessly complex.” Liberal supporters of the law agreed, telling the paper: “The folks who are helping consumers are reeling. A consumer can’t be expected to understand this.”

You can call this a Republican “hack job” but unfortunately most Republican protestations that have been ridiculed by the legacy media and Democrats have turned out to be largely truthful.

Prediction: Chaos


For tax preparers, PPACA may bring a paperwork feast

Obamacare WILL bring a paperwork feast – For tax preparers, PPACA may bring a paperwork feast | LifeHealthPro. Only the sun coming up tomorrow morning is more certain.

At this point, Liberty Tax is predicting the PPACA form business will increase fee revenue about 2.5 percent to 3 percent in 2015, and more than that in 2016.

One source of optimism: Liberty Tax believes Form 8962 will be intimidating enough to force many consumers who have been doing their own taxes to seek professional help.

“Our franchisees are prepared for a robust tax season,” Hewitt said. (Hewitt is chairman of Liberty Tax – Ed)

Bill Cobb, president of H&R Block, is also looking forward to an increase in the percentage of tax filers who seek professional help. “Those that received an advanced tax credit will no longer be eligible to file their returns on a 1040EZ,” he said. (emphasis added in this quote)

This is going to be a giant mess. Keep it simple stupid and Obamacare are on opposite sides of the universe.