Tax form section showing various deductions.

The Affordable Care Act (Obamacare) and Your Taxes

 

  • Taxpayers must let the IRS know when filing that they had the required minimum essential health care coverage or were exempt.
    1. If you have the proper insurance you should receive either a 1095-C or a 1095-B.
    2. If you did not receive a subsidy/credit and all dependents you claim also had insurance simply checking a box on your form is probably all you will need to do.
  • If you or your dependent did not have the proper insurance you may have to pay the “Shared Responsibility Payment”
  • The required payment is the greater of 1% of your household income that is above the tax return filing threshold for your family or your family’s flat dollar amount, which is $95 per adult and $47.50 per child to a maximum of $285. This payment amount is capped at the cost of the national average premium for a bronze level health plan available through the Marketplace in 2014. The link above for threshold also gives this amount.
  • Some taxpayers may be exempt from the payment. Form 8965 needs to be filed to get the exemption. The main qualifications for the exemption are:
    1. Income below the filing threshold
    2. Affordability:You can’t afford coverage because the minimum amount you must pay for the premiums is more than eight percent of your household income.
    3. Hardship
  • If you received a credit/subsidy you must file Form 8962 to claim the premium tax credit and reconcile your advance credit payments with the premium tax credit you are eligible to claim on your return.
    1. If the amount is less than the actual premium tax credit, you will get the difference as a higher refund or lower tax due.
    2. If the advance credit payments that were paid to your health care provider were more than the actual credit, you may need to pay the difference with your tax return.
    3. The completed Form 8962 must be filed with your federal income tax return.
    4. You must file a tax return even if you income is below the threshold for filing.
    5. This form and it’s calculations can be long and tricky.
  • You cannot use the short Form 1040EZ if you get this credit.
  • Rest assured we are well prepared to handle this new law’s provisions for you