Have you started thinking about filing your 2014 taxes?
April 15 may be a few months away, but this year — the first year the Affordable Care Act (ACA) is in effect — filing taxes will be more complicated for millions of Americans.
That’s because certain provisions of the new law — namely, penalties and subsidies — will be reconciled at tax time.
If you got health insurance through your employer and were covered for all of 2014, filing your taxes will be not much different than in years past; you will simply check a box indicating you were covered.
But for those who either went without coverage for all or part of 2014, or those who collected a subsidy to help buy coverage on the exchange, things may get tricky, with new forms to fill out and new calculations to make.
If You Were Uninsured for All or Part of 2014
The individual mandate provision of the ACA requires most Americans to have health insurance starting January 1, 2014.
If you went for 3 consecutive months or more during 2014 without health insurance, you will be assessed a penalty unless you are exempt from the individual mandate — and can prove it.
The IRS will deduct the penalty you owe from any tax refund you may be due. And if you aren’t expecting a refund, don’t think you’re in the clear. You will be assessed interest if you don’t pay the penalty on time. Furthermore, the IRS can deduct any amount you owe from future refunds for up to 10 years!
|Planning tip: Avoid a penalty for 2015 by purchasing 2015 health insurance during open enrollment until 2/15/15. To get an instant quote click here for plans without a subsidy; click here for plans with a subsidy.|
Claiming an exemption can get tricky because, depending on the reason, you may need to actually apply for the exemption — either in advance through the health insurance exchange or on your tax return. Click here to learn more about the exemptions available and how to apply for each one.
|Planning tip: Be sure to allow yourself enough time when applying for an exemption. Some require a few weeks to process and involve waiting for an exemption certification number to enter on your tax return.|
If You Bought Subsidized Health Insurance on the Exchange
If you collected a subsidy in 2014 to help pay for your health insurance, you may be surprised to learn that the IRS will reconcile the amount of subsidy you collected with the amount you should have gotten based on your actual 2014 income. Remember, if you collected a subsidy in advance, the amount you received in 2014 was based on your anticipated income for the year.
If your actual income ended up being higher than anticipated, you could owe money back. Conversely of course, if your income was below what you anticipated, you may get a refund.
Also, any changes in life circumstances — divorce, marriage, job status change, etc. — can also have an impact on your subsidy amount.
|Planning tip: You may be able to reduce your 2014 income enough to qualify for the subsidy you collected by, for example, contributing money to a retirement account. Contributions for 2014 can be made through April 15, 2015. Consult a tax professional for details.|
Industry experts predict the IRS will be inundated with calls from taxpayers and tax preparers sorting through new reporting rules and regulations. The IRS itself has said it is unlikely to be adequately prepared to answer the volume of calls it receives.
Just another reason to get ahead of the curve and start looking at things now.
If you need more information about your options, or need to purchase 2015 health insurance, please contact our office by phone: 1-888-396-2341 or 703-707-8270.
Open enrollment runs through February 15, 2015. You can view your options for 2015 health insurance:
- Click here if you may be eligible for a subsidy in 2015.
- Click here if you will not be eligible for a subsidy in 2015.