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ACA and Your 2014 Tax Return

  • 24 March 2015
  • Author: Cari Holbrook
  • Number of views: 2656
ACA and Your 2014 Tax Return

The Affordable Care Act is expected to complicate an already arduous tax season. Just how much it will complicate your own efforts depends on your situation. If you anticipate a tax credit like the IRS Small Business Tax Credit, you may not receive good news.

First, the basics: If you had existing qualifying health care coverage—coverage through a group plan or government-sponsored program like Medicare, Medicaid or CHIP—the IRS asserts you’ll simply need to check a box on your tax return. If you’ve purchased your coverage through the Health Insurance Marketplace (Healthcare.gov), you also need to provide information about your coverage on Form 1095-A.

For those not “checking the box” (meaning, without qualifying coverage), the tax penalty in 2014 is either one percent of a household’s yearly income or $95 per household member ($47.50 for children under 18), whichever is higher. This penalty is expected to rise significantly every year. For 2015, for instance, the penalty becomes 2 percent of a household’s income or up to $325 per household member (more details here).

On the other hand, if you’re fully insured and counting on tax credit for it, don’t hold your breath. Many individuals underestimated their income and are now having to reconcile the difference. In fact, Accounting Today recently published that, just six weeks into the current tax season, “a 52 percent majority of taxpayers who enrolled in health insurance coverage through a state or federal marketplace have needed to pay back a portion of the Advance Premium Tax Credit, and the average amount they paid back is $530, decreasing their tax refund on average by 17 percent.”

And while the IRS Small Business Tax Credit looks great on paper (it reimburses small businesses up to 50 percent), we’ve found that very few businesses qualify. In order to do so, your business must have fewer than 25 full-time employees, pay those employees an average wage of $50,000 or less, reimburse at least 50 percent of those employees’ health insurance premiums AND have purchased that insurance through the federal government’s small business health insurance, or SHOP, marketplace.

For help in navigating tax season within the context of issues like ACA, contact Steven Bankler, CPA, Ltd


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