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!”