Wayne area specialist in Accounting and Tax Services, Ed Caine, of EP Caine & Associates CPA, LLC describes the implications that not carrying a health insurance policy will have on taxpayers in the 2015 year. The Affordable Health Care Act (also known as “Obamacare”) requires that all taxpayers report health insurance coverage, or else be subject to paying a tax penalty in 2015.
If you and your family carry a health insurance policy and are covered medically, you simply will check a box on your tax return indicating so, and your online tax solution will guide you through the simple process of reporting it for the 2014 year. This is the first year that you must report health coverage on your tax return.
If you are an individual who does not carry medical coverage, and did not do so for three or more months in the 2014 year, you will be subject to pay a tax penalty. The amount of the penalty is dependent upon the number of individuals reported on your tax return (and in your household) and on your household income.
Under the circumstances that you do not have access to minimum employer-provided health coverage, you may purchase health insurance through a marketplace. You may also qualify for an advanced tax credit that is applied directly to your monthly premiums. Eligibility and amount are based upon the cost of marketplace premiums, and again, your household size and income.
In 2014, the basic tax penalty for not carrying health coverage, for an individual with no dependents, will be $95. This number will increase in subsequent years, rising to $325 in the 2015 tax year and $695 in 2016. The penalty will be indexed for inflation in the years following 2016.
Also effective beginning in 2014, certain taxpayers can use a refundable tax credit to help offset the cost of health insurance premiums so that their insurance premiums do not exceed a certain percentage of their income. Individuals qualified for this are those with incomes between 133 percent and 400 percent of the federal poverty level. A scale based on the size of the family will be used to decide the amount of the credit. Furthermore, married taxpayers must file joint returns to qualify for this benefit.
Ed Caine of EP Caine and Associates CPA, LLC understands the tax code and all of the specifics surrounding the tax implications of the Affordable Health Care Act (“Obamacare”). He can help you should you find yourself in the situation where you are suffering a tax penalty for not carrying health coverage. Serving the Wayne area, you can contact him at (610)-525-2933 to for your accounting and tax services needs. You can also visit the business website at cainecpa.com for more information.