Affordable Care Act’s Tax Effects

Affordable Care Act’s Tax Effects

The Obama administration’s Affordable Care Act — including its penalty provision — is in effect for the first time this year and will be reconciled through a person’s tax return.

For most taxpayers, this will simply mean checking a box on a tax return indicating they had insurance for the full year. But millions of others will have to grapple with new tax forms and calculations that may generate unexpected results.

Many people received subsidies, but those subsidies were based on previous years’ income — so people whose incomes have changed will inevitably have to pay some of that money back, while others may receive fatter refunds.

People who were uninsured for more than three consecutive months may owe something. (And since the penalty will double next year, now is the time to determine how much that might cost, before it is too late to buy a health policy through a federal or state-run marketplace for 2015.)

Some exemptions must be applied for through the exchanges, while others can be claimed only on income tax returns and some can be granted through either channel. (The I.R.S. and Healthcare.gov have lists of where to apply for each). For instance, people who cannot find affordable coverage — costing 8 percent of household income or less — must claim that exemption on their tax returns.

But the most time-consuming exemptions require mailing a signed paper application to the exchanges: These are processed manually, which can take a couple of weeks. Those exemptions include several hardships, such as foreclosure, the death of a family member, unpaid medical bills and eviction, as well as religious reasons for not using insurance

See the following link for more info: http://www.cnbc.com/id/102296511

 

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