Now that the first year of the Affordable Care Act is behind us, all that’s left to wrap up is the filing of 2014 tax returns. With the implementation of the ACA now in full force, Americans will notice some changes on this year’s tax forms.
As required by the ACA, filers must indicate whether they had health insurance coverage in 2014 and whether they received any tax credits to help pay for it. Those who didn’t have coverage will face a fine. Those who received subsidies may end up getting smaller refunds than they expected (or even owing money to the IRS) if the credits they received were too large.
In fact, H&R Block estimates that as many as half of the approximate 6.8 million Americans who received subsidies may have to refund a portion of that money to the government. As a result, many taxpayers may end up confused or even upset when they find out they’re getting less of a refund than they hoped.
Many tax preparation firms, such as Liberty Tax Service, are taking additional measures to assist their customers with the additional filing requirements necessitated by the ACA. Stores are opening weeks earlier than usual, and special services are being offered to help individuals comply with the requirements and apply for exemptions where applicable.
The IRS is also bracing itself for more customer phone calls, even though the agency has 13,000 less full-time employees than it did in 2010 due to budget cuts. The IRS, along with the Centers for Medicare and Medicaid Services will be reaching out to consumers in January to let them know what to expect during tax season. They’re also encouraging Americans to file their taxes electronically in order to receive a quicker return.
Since employers aren’t yet required to submit the names of employees who are receiving coverage through their jobs, the IRS is currently relying on consumers to answer honestly whether or not they had health insurance or need to pay a penalty. Those who answer ‘no’ will be expected to request an exemption or calculate the amount of any penalty they owe. Those fines start at $95 and range up to 1{d044ab8acbff62f209a116f8142e303cb886f535b0fcf58cb82cde7cb327d3c9} of the household’s income and is added to their 2014 tax liability.
Those who have questions should contact a professional tax adviser. More information is also available in this full article on MarketWatch.