your federal income taxes this year will be most
because this is the first time Americans will experience
the complex connections between the Affordable Care Act
a rundown of how all this will work.
WHO HAVE HEALTH INSURANCE
the vast majority of Americans, tax filing under the
Affordable Care Act will be as simple as checking a box
to show they had health coverage all year," said
Treasury Secretary Jacob J. Lew.
Line 61 of the 1040 tax form, you must indicate that
you, your spouse (if youíre filing a joint return) and
your dependents had health insurance last year.
you bought health insurance through the health insurance
marketplace, you will receive IRS Form 1095-A, Health
Insurance Marketplace Statement, from the exchange. It
will list which members of the household were covered
and for how long, as well as premium costs and any
advance payment you received for premium tax credits.
you got the tax credit, you will need to file Form 8962,
Premium Tax Credit, with your tax return. You will need
information from the 1095-A form to fill out Form 8962.
CLAIMING AN EXEMPTION FROM THE PENALTY FOR NOT HAVING
fraction of taxpayers will take different steps, like
claiming an exemption if they could not afford
insurance," Lew said.
seeking an exemption must file Form 8965, Health
Coverage Exemptions, with their tax return. It lists the
possible exemptions and lets you claim the one that
WHO CHOSE NOT TO OBTAIN COVERAGE AND NOW MUST PAY A TAX
smaller fraction of taxpayers will pay a fee if they
made a choice to not obtain coverage they could
afford," Lew said.
penalty for 2014 is $95 per person (with a family
maximum of $285) or 1 percent of your yearly income,
whichever is higher. Only the amount of income above the
tax filing threshold, about $10,000 for an individual,
is used to calculate the penalty. Your filing threshold
is the minimum amount of gross income a person your age
and filing status must make to be required to file a tax
people still believe that the penalty is $95 per
person," said Kathy Pickering, executive director
of the H&R Block Tax Institute. "If youíve
got a couple thatís making $65,000 a year, and the
spouse didnít get insurance, now theyíre thinking itís
$95. But when they come in to do the calculation, theyíre
going to learn that the penalty is actually $447, and
thatís a lot higher than the $95 they might have been
penalty for not having health insurance increases every
year. For 2015, it will be $325 per person with a
maximum of $975 for a family, or 2 percent of your
WHO RECEIVED ADVANCE PAYMENTS OF THE PREMIUM TAX CREDIT
premium tax credit is for certain consumers who bought
health insurance through the health insurance
marketplace, and it reduces the amount of tax owed. The
government makes advance payments of the credit to help
consumers pay a share of their monthly health insurance
advance payments are based on an estimate of the credit
that you will claim on this yearís tax return. That
estimate is based on a formula that takes into account
income, household size and health insurance costs in
who got too much of a subsidy will see their tax refunds
reduced by the IRS. For example, you will get dinged if
your income went up during the year and you didnít
report that to HealthCare.gov or to your health
you received less of a subsidy than you were entitled
to, the IRS will owe you instead.
part is going to trip up many taxpayers.
people went to the marketplace to sign up for insurance,
at that point, they were estimating what they thought
their 2014 income was going to be," Pickering said.
"Now, theyíre filing their tax return with what
it actually was, and in many cases, itís going to be
different because life events change your household
income. You may have gotten a better job, you have lost
your job, gotten married, got divorced.
of those kinds of things impact the household income,
then that impacts the amount of premium tax credit that
youíre eligible for."
will be taken aback if they have to repay the credit.
they were enrolling in the insurance, they thought of
that as just a discount on their insurance
premium," Pickering said. "They didnít think
of it as this is something they might have to pay back
if they got too much."
expect too much help from the IRS.
John Koskinen warned Congress that budget cuts could
hamper taxpayer services this filing season.