Will you have a credit or a penalty on your tax return this year? Will you have both a credit and a penalty? Or will you have neither a credit nor a penalty?
With the introduction of the Affordable Care Act (or Obamacare) each one of these above scenarios is a possibility on your tax return. The question is, which one will apply to you?
Will you have a credit? This credit is called the Premium Tax Credit and it may be available if you purchased your health insurance through the Marketplace (The Marketplace is the name used by the government to describe where people without health care insurance can find health insurance options and also purchase insurance).
If you qualify for this credit, you will need to claim it on your tax return. The amount of the credit will depend on a number of different circumstances. You also must have received form 1095-A from the Marketplace in order to claim the credit. Be careful though, some have already received the credit in the form of an advanced payment. When this occurs you could be responsible to pay some of the credit back if you received too much!
Will you have a penalty? Then penalty is called The Shared Responsibility Payment and it is for anyone without minimum essential health care coverage or for those that do not qualify for a health care coverage exemption. To put it simply, if you don’t have health insurance…you will pay a penalty. But don’t worry, there are some exceptions.
If you are unfortunate enough to have to pay the penalty, it will be calculated on a monthly basis for each month you did not have insurance. This amount goes through a complicated formula that is based on your income, filing status, national premium average and number of uninsured household members. This can be quite complex. But to simplify, the penalty will be the greater of 1% of your household income that is above the filing threshold or $95 per adult and $47.50 per child (limited to $285 per household) for tax year 2014. There are many more rules to this, but this is the main part of the penalty.
Will you receive the credit and pay the penalty? Possibly. If you purchased health care coverage through the marketplace but not at the beginning of the year, you may have a credit for purchasing the health care and a penalty for the months that you did not have health care.
Will you have neither a credit nor a penalty? This is possible as well. If you purchased your own health care coverage outside of the marketplace, or if you had health care coverage provided by your work, then you will not qualify for the credit and will not be subject to the penalty. This is because you had health care insurance for the entire year.
As you can see, the affordable care act can be very complex. We highly advise you to consult with a tax professional to see how this credit or penalty applies to your specific situation. At Listo Tax Solutions, we take great care to insure that you comply with the new Affordable Care Act so that you do not receive a dreaded IRS letter later in the year. Contact your local Listo Tax Solutions office today at (786) 577-0191 or email at d.leiva@listotax.com to setup an appointment.
Why is it that the poor are the blame for America's problems? It boggles the mind when i see the callous,greedy and selfish Americans that see nothing wrong with corporate welfare! I would rather pay taxes to feed the poor,than to have my tax dollars given to the rich! The President isn't a socialist, he's just trying to level the playing field. I'm a disabled veteran and i see a lot of veterans on public assistance. That's a problem! You all claim to love the veteran, but you object to them needing public assistance! You all are just hypocrites! Same thing with abortion, you all love the fetus until they are born and that's when you state by your actions that they are on their on! The God that you claim to love,stated ,the poor you will always have with you! Many people don't want a hand out,they need a hand up! Many are the working poor and the reason that they need help is because what they earn doesn't cover all of their needs. Theirs the elderly that needs help, a lot of them has to choose between eating or their medicine. The only group that's really living it up is the 1% ! I am tired of paying their taxes!,it's time for the 1% start paying their own taxes! For too long the middle class have been carrying the 1% on their backs! Where's my tax break? Why am i paying more taxes than Romney? Stop criticizing the poor and start blaming the true culprits, the 1%! The hypocrisy of you all is nauseating!
Even this "explanation" is confusing – you can be fined, have others pay for your health care (called a credit) or neither or both. Wow, that sure clears THAT up. How about addressing that so far the ACA is operating at a deficit, with more people signed up that want free health care and hardly anyone signing up to pay for others' health care. However, the "penalties" are getting larger and larger, as are the premiums for those people who used to have sensibly priced health care costs, but now have to pay for non-employed persons. The young students (who were supposed to voluntarily flock to Obama's call to help redistribute their wealth) are especially ignoring the call to pay for much more than they need just to help the non-employed. I guess the theory of Socialism sounds great when presented in the class room but don't like it when they are expected to give up money out of their pockets to make sure that unemployed welfare recepients have unlimited health care.