How Obamacare Impacts Your Taxes

pstrongYou may not even be aware of the term, “Advance Premium Tax Credit,” but you definitely need to understand how it impacts the amount of taxes you could owe or how much of a refund you may be entitled to./strong /p pspanNot only has the Affordable Care Act (ACA or ‘Obamacare’) impacted Healthcare, it has had a significant impact on taxes as well. Here’s what you need to understand about Obamacare works and how that affects your taxes./span /p pstrongPenalties/strong /p pspanMost people are aware of there being a financial penalty imposed for not having health insurance due to all the controversy surrounding Obamacare. Essentially, the penalty is incurred by simply going without insurance. However, some taxpayers may be exempt from the penalty. And just what is the penalty?/span /p pspanThe penalty is either a flat fee or a percentage of your annual household income. Also, the penalty will increase over the next 2 years. Which method you have to pay is determined by whichever penalty method is higher. The penalties are as follows in this table:/span /p pimg height=215 width=622 style=display: block; margin-left: auto; margin-right: auto; class=media-element file-default panopoly-image-original src=https://www.cpagardens.com/sites/cpagardens.com/files/styles/panopoly_im... alt= //p pAs it may be becoming obvious to you, the penalty for not having insurance is incurred when you do your taxes. So, if you did not have insurance or were underinsured, you’ll likely either get back less of a refund or potentially owe more taxes./p pstrongExemptions/strongbr / br /Certain circumstances may make you eligible for an exemption(s) that could lessen the penalty if not negate it. There are 2 kinds of exemptions: a emMarketplace Exemption/em and a emTax Return Exemption/em./p pBelow is a list of each falling under the two types of exemptions./p pemTax Return Exemption/em /p ul liYou did not enroll in a fiscal year employer-provider plan that you were eligible for during the tax year you’re filing /li liYou were not without insurance consecutively for over 3 months /li liYou did not have valid immigration papers and were not a US citizen /li liYour health care coverage was effective May 1, 2014 /li liYou filed a 1040NR or were a US citizen living out of the country /li liYou were a member of a health care sharing ministry /li liYou were in a Limited-Benefit Medicaid or Tricare program /li liYou were incarcerated /li liYou were a member of an Indian Tribe and qualified for Indian Health Services /li liHousehold income was below the filing requirement /li /ul pemMarketplace Exemptions/em /p ul liEndured hardships obtaining insurance /li liYou were caring for a disabled or sick family member /li liYou were victimized by domestic violence /li liYou bereaved the death of a near family member /li liYour property was substantially damaged due to a qualified disaster /li liYou filed for bankruptcy /li liYou were homeless /li liYou had your utilities shut off /li liYou were foreclosed on or evicted /li liYou were a member of a religious body that opposes insurance /li liYou had dependents without insurance  /li liCoverage options were unaffordable /li liYou had coverage provided by a service organization such as AmeriCorps /li liYou were denied medicaid /li liYour insurance was cancelled /li /ul p br /strongUnderstanding The Advance Tax Premium Credit/strongbr / br /In order to help pay for Marketplace insurance plans, your tax credit was “given” to you at the start of the tax year as an advance and that advance went straight to the insurance provider you chose to lower your premiums./p pThe amount of that advance was determined by your previous tax year’s total income. So this year, your total income may be different and that difference has to be reconciled in this tax year./p pSo, if you made a lot more money this year, that difference in the estimated tax credit and the actual income could negatively impact your total refund or how much you owe. Conversely, if you made less than last year, it will benefit you in regards to the difference./p pAgain, there are other tax events that could lower or raise your taxable income and then help or hurt how much you owe or are refunded. For example, if you underestimated your gross income for this year by $3,000 but had a baby during the year, it pretty much evens out./p pstrongWhat To Do/strongbr / br /We strongly recommend using a tax professional to prepare your taxes to help make sure you get every single credit and deduction you’re entitled to. Don’t sweat about the ACA and your taxes; let us handle it for you./p