Friday, January 9, 2015

Taxing Health

From USA Today:
"Health insurance may muddle tax time for some"

Federal officials and private tax preparers started offering consumers tax filing help Thursday as the first tax deadline that involves health insurance looms in April. About 75% of taxpayers will only have to check a box saying they had health insurance in 2014, the Department of Health and Human Services says. Those who received subsidized coverage through the Affordable Care Act exchanges or decided not to enroll, will have to go through a more complicated process. "It's going to be confusing for people," says H&R Block CEO Bill Cobb. "The majority of people still don't understand the intersection of the Affordable Care Act and taxes."  Some taxpayers will be able to claim an exemption if they couldn't afford insurance; others will need to reconcile the financial assistance they received with their income. Others will pay a fee if they decided against getting coverage.  When people signed up on the exchanges for 2014 coverage, they had to estimate what their 2014 income would be. Based on that, most received advanced premium tax credits that offset the cost of premiums. These were paid directly to insurance companies and consumers paid an adjusted premium. That could prompt people to forget that the money wasn't just "free money," says Cobb. "There is not broad awareness that this was an advanced premium tax credit and not a subsidy," says Cobb. If the amount they estimated is lower than what they actually made, their refund will be lowered by the amount of the excess tax credit or they might owe money if they aren't eligible for a refund. If it was higher, they will get additional money refunded or their balance due will be lower than otherwise expected. Those who got a tax credit will receive a Form 1095-A from the government and won't be able to file using a 1040EZ if that's what there were doing previously. These taxpayers will use data on that form to fill out Form 8962. Cobb estimates about 90% of those receiving advance premium tax credits receive refunds. "We are working to ensure that whatever their experience, consumers can easily access clear information since this is the first year they will see certain changes to their tax returns," said Treasury Secretary Jacob Lew. HHS and the Internal Revenue Service plan to release tools for tax filers. Consumer-friendly tools and resources will be made available for those tax filers who have health coverage through the Marketplaces, those seeking an exemption, and those looking for information about the fee for those who could afford to purchase health coverage but chose not to. General information is available now at IRS.gov/ACA or HealthCare.gov/taxes/. H&R Block is holding open houses Thursday until 9 p.m. at all of its locations. Consumers can get free help determining how the ACA will affect their tax preparation.

^  Of course taxpayers are going to be confused about all of this considering the Government has, and continues, to do a very poor job of explaining everything. I guess you can't explain something you yourself do not understand. ^

http://www.usatoday.com/story/news/nation/2015/01/08/obamacare-health-insurance-taxes-exemptions-check-box/21440171/
 

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