Home Finance The Impact of Obamacare on Your Tax Return

The Impact of Obamacare on Your Tax Return

Eric Weinstein is a Certified Public 
Accountant who recently relocated to the Commack/Dix Hills area, where he provides accounting services to individuals and small businesses. He is a professor of accounting and business at Suffolk County Community College, and has authored five college textbooks on a variety of topics, including Payroll Accounting. He is enjoying meeting new clients in the area, and can be reached via phone at 516-662-7165, and e-mail at weinstee@yahoo.com. 

    With the April 15th tax deadline fast-approaching it is time to turn our attention to personal tax returns. Many taxpayers have been concerned as to how the Affordable Care Act (commonly referred to as Obamacare) will impact their 2014 tax returns. While the majority of taxpayers will be minimally impacted, certain taxpayers could be surprised by their returns. 

    •    What is the impact? All taxpayers must indicate on their tax returns whether they had health insurance coverage during 2014. They also must indicate whether that coverage was obtained through the Marketplace. For those taxpayers who had health insurance that was not obtained through the Marketplace (estimated at over 80% of taxpayers), this is the extent of the impact. For taxpayers who did obtain health insurance through the Marketplace, Form 1095-A (which policyholders should have received a few months ago) reports all pertinent information relative to the insurance held. Depending upon the taxpayer’s earnings during 2014, the inclusion of data from Form 1095-A could either improve or worsen the 2014 tax return. Lastly, for taxpayers who did not carry health insurance, unless they qualify for an exemption they will be subject to a penalty (referred to as a Shared Responsibility Payment) that will be levied as part of the tax return.

    •    How is the impact calculated? If you purchased health insurance through the Marketplace, you estimated your 2014 earnings when doing so. These estimates are now compared to your actual earnings during 2014 to determine whether you paid too much, too little, or the correct amount for your coverage. Your 2014 tax refund (or amount owed) will be adjusted to account for this comparison. For individuals who did not have health insurance coverage, and did not qualify for an exemption, the penalty assessed can range from $95 to thousands of dollars (a worksheet associated with Form 8965 is used to calculate this penalty).

    If you are among the many taxpayers who either purchased health insurance through the Marketplace, or did not have coverage during 2014, take some time to research and understand the above information. Not only will this benefit you when reviewing your 2014 tax return, but it will also allow you to more effectively plan for your 2015 tax return. If you have any questions about the impact of the Affordable Care Act on your return, contact your accountant for more information.

 

 

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