Tag Archives: penalty/tax

Obamacare tax requirements

Many Americans unaware of Obamacare tax requirements.

Last year, for the first time, most Americans were required by the Affordable Care Act to have some kind of health coverage or be subject to a tax penalty. But this year is the first that the tax is being collected—and the first time that income tax returns ask about filer’s health coverage.

The Kaiser poll found that 53 percent overall—and 57 percent of people without health insurance—know that this is the first year they are required to disclose their coverage status.

About a third overall named a different year for the requirement, and 16 percent admitted to not knowing when the requirement starts.

Among respondents who personally completed and filed their returns, 76 percent said they had seen “a place to indicate whether they had health insurance,” according to Kaiser.

But the remaining self-filers either didn’t see such a place, or were unsure if they did see it, the poll found.

Sounds like the Obamacare marketing leaves just a little to be desired!


The Affordable Care Act meets your tax return

IRS Will Ask On Your 1040: Did You Have Health Insurance?.

See Line 61 on the 1040 tax form: “Health care: individual responsibility (see instructions) full-year coverage.” If the taxpayer, and spouse (if married), and all dependents had coverage all 12 months of 2014, then all’s well. Check the box and move on. For those who can’t check the box, there could be a penalty, or as the government calls it, a “shared responsibility payment.”

Have fun!


Obamacare and taxes: Full employment for H&R Block

H&R Block Out to Help Americans’ Resolve to Tax Preparation – Video – TheStreet.

If you’re on Obamacare, and especially if you are receiving a subsidy or intend to claim it on your tax return, things just got complicated. No more 1040EZ if you’re in subsidy land.

No doubt, Obamacare is a full employment service for H&R Block and other tax preparation services.


Taxpayers duck Obamacare tax

Taxpayers duck Obamacare tax, snubbing IRS – Washington Times.

The episodes raise questions for the revenue agency, which is trying to figure out just how far it’s prepared to go to collect the Obamacare tax — and if future administrations will enforce it at all.

Under the 2010 law the IRS cannot pursue criminal penalties or put liens on the property of people who ignore the Affordable Care Act’s mandate.

“All the IRS can do to get the money is ask an individual to pay it, and, if they don’t, reduce their future refunds,” said Brendan Buck, spokesman for House Committee on Ways and Means Chairman Paul Ryan, Wisconsin Republican, who oversees tax policy.

Be careful out there…


IRS: Obamacare Penalty Exemptions

Individual Shared Responsibility Provision – Exemptions: Claiming or Reporting.

There are a myriad of ways to avoid the Obamacare penalty. No better place to go but the enforcer, the IRS.

  • Coverage considered unaffordable
  • Short coverage gap
  • Income below the return filing threshold
  • Citizens living abroad and certain noncitizens
    • must be out of country at least 330 days
  • Members of a health care sharing ministry
  • Members of Indian Tribes
  • Incarceration
  • Members of certain religious sects
  • Aggregate self-only coverage considered unaffordable
  • Gap in coverage the beginning of 2014
  • General Hardship
  • Coverage considered unaffordable based on projected income
  • Determined ineligible for Medicaid in a state that did not expand Medicaid coverage (income dependent)
  • Resident of a state that did not expand Medicaid (Income dependent)
  • Unable to renew existing coverage
  • Gap in CHIP coverage
  • AmeriCorps coverage
  • Limited benefit Medicaid and TRICARE programs that are not minimum essential coverage

Details provided at the link.


Will Only Suckers Pay The ObamaCare Tax Penalty?

Be careful out there… Will Only Suckers Pay The ObamaCare Tax Penalty? – Investors.com.

The SRP (Shared Responsibility Payment – Ed) is a clumsy euphemism for the ObamaCare individual mandate tax penalty, which is $95 or 1% of household income, whichever is greater, for those who didn’t have insurance in 2014. That increases to the greater of $325 or 2% of income for those who don’t have insurance this year, and then to $695 or 2.5% of income the year after that.

The mandate and the tax penalty behind it are core elements of the health law, but it’s becoming increasingly apparent that they are relatively toothless. There are dozens of exemptions available, some of which require no paperwork. It can be far less complicated to avoid the ObamaCare tax penalty than pay it. And the already overworked Internal Revenue Service has little authority to collect any unpaid penalty taxes due.

This has led industry analyst Robert Laszewski to ask “is there really an individual mandate?”

And here’s how easy it is to avoid the penalty?

Penalty complexity. When filling out the new Form 1040, taxpayers can check a box indicating that they had “full-year coverage.” Anyone who checks this box doesn’t have to pay the penalty, fill out any additional forms or submit any evidence of coverage, leaving it to the IRS to determine whether they were properly insured.

Those who don’t check this “full-year coverage” box, in contrast, must locate a complicated worksheet in a separate instruction booklet to determine the size of their penalty. The worksheet requires taxpayers to indicate each month that they, their spouse or dependents didn’t have government-approved insurance, and then do a series of calculations to see what they owe.

Some tax professionals admit that there is little to keep someone from just checking the box and avoiding the extra hassle and cost of figuring out the penalty, even if they didn’t technically meet the requirement for “full-year coverage.”

All that said, my motto is “don’t mess with the IRS!”



Obamacare subsidy clawbacks commonplace

H&R Block analysis: Most ObamaCare customers paying back portion of subsidies | Fox News.

Too much subsidy:

An analysis by tax-preparer H&R Block found that to date, 52 percent of those who enrolled in Affordable Care Act coverage are paying back part of their premium tax credits.

On average, they’re paying back $530, reducing the average refund by 17 percent.

H&R Block reports that most clients are answering truthfully as to whether they had coverage in 2014, as required by the law. Those who didn’t have coverage are paying an average $172 penalty.


Obamacare Penalties lead to possible open enrollment

Democrats Beg Obama to Bend Obamacare Rules to Avoid Tax Penalties for Millions – Breitbart.

Reps. Sander Levin (D-MI), Jim McDermott (D-WA), and Lloyd Doggett (D-TX) have strongly requested a special sign-up for the uninsured who will all be hit with a $325 fine or two percent of their income (whichever is higher) for failure to enroll in 2015. In 2016, the Obamacare tax penalty will be an average $1,100, reports the Associated Press. For 2014, the Obamacare tax was $95 or one percent of income.

“Open enrollment period ended before many Americans filed their taxes,” the three lawmakers said in a statement. “Without a special enrollment period, many people (who will be paying fines) will not have another opportunity to get health coverage this year.”

They passed the law to find out what was in it, and they didn’t see this coming?


Only 3 Shopping Day Left!

Times running out to sign up for Obamacare – Yahoo Finance.

What happens if you miss the health insurance deadline?
If you’re not eligible for Medicaid or don’t qualify for an exception and you miss the health insurance deadline, you could face a financial penalty. If you’re worried about being without insurance, know that you’ll be able to sign up for coverage of some sort after the deadline, but what’s available will be only short-term or temporary health insurance, which doesn’t have to offer the “essential benefits” of Obamacare.


How to beat this month’s Obamacare deadline – Yahoo Finance

How to beat this month’s Obamacare deadline – Yahoo Finance.

If you’re in Colorado, call Chris Adams at 303.495.3045!

But it’s time to get cracking. February 15 marks the last day for Obamacare participants to make changes to their coverage for this year. Those who sign up for plans for the first time or change their coverage by February 15 will have their new policy start March 1. After open enrollment, consumers without a “qualifying life event,” like a move or the birth of a child, must wait until fall to make changes for 2016 coverage. And while Obamacare faces a challenge in the Supreme Court and in the Republican-led Congress, it remains the law of the land.

If currently uninsured people do nothing by February 15, they face a penalty next tax season unless they qualify for an exemption on religious or other, limited grounds. The fee for not buying coverage for 2015 will be 2% of your yearly household income, or $325 per adult and $162.50 per child for the year (up to a family maximum of $975), whichever is higher. The federal government estimates that as many as six million households may have to pay a penalty this year for not having had coverage in 2014, The Wall Street Journal recently reported.

There’s a mistake in this article regarding the penalty. The percentage is correct but it is NOT your yearly household income, it is your taxable household income for the year.


IRS Waives Penalties for Late Payments Linked to Obamacare

Because it’s too complicated – IRS Waives Penalties for Late Payments Linked to Obamacare – Bloomberg.

The U.S. Internal Revenue Service will waive some penalties for taxpayers who owe taxes because of Obamacare.

The changes, announced Monday in Washington, apply only to people who received subsidized health insurance during 2014. On tax returns, they must reconcile eligibility for the credit with their actual income and pay back some of the subsidy if they received too much.

That can happen if someone got a higher-paying job or a raise during 2014 and didn’t ask the government to alter the subsidy.

The IRS will waive penalties for making that payment late or for failing to pay estimated taxes throughout 2014.

Taxpayers must send in a letter for a penalty waiver. They still must pay the taxes within a year and will owe interest after April 15, the due date for individual tax returns.

Rube Goldberg…


Obamacare Penalty: More than $95! Who Knew?

“People would hear the $95, quit listening, and make an assumption that that was what their penalty was going to be,” said Chuck Lovelace, vice president of affordable care for Liberty Tax Service. “I think that a lot of people will be surprised when they get in there and find out that their penalty is [based] on their household income.”

via Obamacare penalty may come as shock at tax time – Washington Times.

For most, the penalty for 2014 is 1% of taxable income and for 2015 it will be 2%.


Received a subsidy? Visit a tax preparation service

Latest Tax Season Headache? Obamacare – Bloomberg View.

There’s been a lot of talk about the “hidden taxes” in the Affordable Care Act, but here’s one I hadn’t thought of before or seen mentioned anywhere: the sudden need for folks with simple tax returns to avail themselves of the services of a paid professional. If you have no income outside a modest salary, and not much in the way of potential deductions such as huge mortgage interest or state tax bills, then there was really no reason to use a tax preparer. Even the mathematically challenged should, with the aid of a calculator, be able to fill out their 1040EZ forms just fine. But Obamacare has introduced a significant level of complexity into the taxes of lower-middle-class wage earners. More of them are going to need an accountant to negotiate the process — or risk owing the government hundreds of dollars because they didn’t fill out the forms correctly.

The money doesn’t go to the government, of course, but in many ways this looks like a tax: Suddenly, people with simple incomes are going to need to pay a significant sum to keep themselves out of trouble with the IRS. This tax will be extremely regressive, because the people most likely to be hit by it are people whose incomes are (or have been) low enough to qualify for subsidies.

That’s not to say that these people are worse off because of Obamacare. For one thing, lower-middle-class workers have always historically used tax preparation services more than they really should, because they really need their refunds and they’re worried about getting it wrong. But it is one more symptom of the law’s Byzantine complexity that new costs keep popping up just where voters least expect them. (all emphasis added)

Goodbye 1040EZ, hello tax complications for those who can least afford it. Rube Goldberg I say.

Oh, the publically traded tax firms are H&R Block and Liberty Tax Services.



The Obamacare tax man cometh: Will you be ready?

The Obamacare tax man cometh: Will you be ready?.

While more than 75 percent of filers are expected to have no problem complying with a new disclosure requirement, millions of others could face a time-consuming, complicated process to determine if they owe the government money or are owed money in connection with subsidies they received to help pay for their Obamacare health insurance plans.

If peoples’ annual incomes were higher than they first estimated when they applied for those subsidies, they will owe money back to the government. The reverse is true if their incomes were lower than estimated. About 85 percent of the 6.7 million paying Obamacare customers as of October were receiving subsidies, and research suggests that many of them could have had income swings during the year.

Millions of other people will be trying to figure out during tax season if they qualify for one or more of a slew of exemptions from the Obamacare mandate that they have health insurance during 2014 or face a fine.