Whether or not you have health insurance, you will see some changes when you file your taxes this year. Time Warner Cable News’ Tara Lynn Wagner looks at how the Affordable Care Act is affecting returns in this Money Matters report.
Under the Affordable Care Act, this is the first tax season Americans will be asked about health insurance on their return. For a majority of taxpayers who get health insurance through their employer, the change comes down to this.
“All they have to do is a check a box on their tax return. ‘Yes I have private insurance.’ And they’re done,” says Fordham Law School clinical professor Elizabeth Maresca.
If you bought insurance through the Marketplace, it’s a little more complicated. By now, you should have received a 1095-A which lists who you bought your insurance from, how much you paid and whether or not you received a credit to lower the cost of your premium. That information then needs to be plugged into Form 8962, which will make sure the numbers add up.
“If you got married, divorced, you had a child, you moved, you lost your job, you got a job, for some people the credit you anticipated you would get when you applied for your health insurance is not going to match the credit that you are actually entitled to. So that may mean for some people they’ll have to pay more when they file or they will get an additional refund,” says Maresca.
This is happening quite a lot. H&R Block says among their early clients who bought through a marketplace, just about half owed money - on average $530 bucks. Meanwhile, about a third was entitled to a bigger credit, an average refund of about $365.
Of course, not everyone bought insurance. Some qualified for an exemption but those who did not now face a fine.
“That is what they call the shared responsibility payment, which effectively is a penalty for not having health insurance. It is an additional tax that will get included in your total tax bill. It will either increase your tax bill come April 15th or reduce your refund,” says Barry Kleiman, tax partner with Untracht Early.
This year’s penalty is relatively small - $95 per adult, less for kids, or 1% of your income - but those numbers will go up. Kleiman says he hopes this first fine will serve as a wakeup call to those who still have not purchased a plan.
“They should look into the exchanges, and get covered so that’s not an ongoing problem for future years,” he says.
Open enrollment has ended, however several exchanges are reopening for a few weeks to give tax payers a second chance to get coverage for 2015 and avoid next year’s heftier fine.
For more information on how the Affordable Care Act may affect your tax return, contact your Untracht Early advisor.