Affordable Care Act causing changes to 2014 taxes
Those starting to prepare their 2014 tax returns should be ready for changes related to the Affordable Care Act, also known as Obamacare.
This is the first year filers are required to tell the government if they have health insurance and potentially pay a penalty if they don’t. Tax professionals have spent long hours training in anticipation of many filers having questions.
“I think a lot of people are going to be surprised of how the whole process works because it is new, it has changed, and change is never easy,” said Jennifer Kurzynski, a tax professional with H&R Block.
Tax forms will include a box to check for whether or not you have insurance. If a filer got insurance on healthcare.gov through a federal exchange, they will get a separate 1095A form in the mail from the IRS that will help reconcile the income estimated to receive a healthcare subsidy with the actual amount earned in 2014.
“If you earn more than you estimated, you’re looking at possibly paying back some of that credit,” said Kurzynski. “If you earn less than you estimated, then you’re looking at getting a bigger refund on your tax return.”
If you don’t have insurance at all, you will have to pay a penalty of $95 per adult, $47.50 per dependent or one percent of your income, whichever is greater. Some filers may be eligible for an exemption to the penalty.
“A common one would be a hardship exemption,” said Lindsay Swindall, a navigator with Covering Kids & Families. “That would include if you were evicted during 2014, had your utilities cut off, things like that.”
Swindall said there is also an exemption for some who may have been moved off Badgercare under changes approved by Governor Scott Walker, allowing those up to 138% of the federal poverty level to avoid the penalty.
She said that taxes this year may be a wake-up call to those who haven’t yet purchased insurance.
“They might realize when they file their 2014 income tax returns that they needed to take action that they possibly didn’t take in 2014,” said Swindall. “So it might kick them into gear to take action for 2015.”
For those needing to do that, open enrollment for 2015 is still available on healthcare.gov through February 15th, and help can be found to sign up through Covering Kids & Families or at the Dane County Job Center.
Those needing help with taxes or concerned about how ACA changes may affect them can go to any H&R Block location on January 8th from 9 a.m. to 9 p.m. to ask questions and get answers for free.
