Obamacare,
aka the Affordable Care Act (ACA) has already proven to have been sold to the
American electorate based on falsehoods, to be massively complex, and not to be
affordable to either the middle class or those who have been granted subsidies.
Now comes the 2015 tax-filing season, and a new set of costs on top of all the
others.
Beginning
with your 2014 tax returns, every taxpayer and tax preparer will need to become
health insurance savvy as every taxpayer needs to be evaluated as to:
(a) Are they required to have
health insurance (the “individual mandate”)?
(b) If required to do so, did they have
health insurance (either through an employer, through the exchange, or
through an individual policy)?
(c) Did the insurance meet the
minimum requirements for coverage?
(d) Were all family members (typically
includes children under 18) covered?
(e) If purchased through an
exchange/marketplace, were they entitled to a premium credit; did they receive
a premium credit; and if so, how much?
You
will need the answers to those questions if you are going to be able to fill in
the below boxes on the revised form 1040! Pay special attention to line
29, 38, and 45.
Line
29 – if the taxpayer purchased insurance through an exchange and received a
subsidy (premium credit) that was GREATER than what they were entitled to, then
the EXCESS (repayment) of the credit received over the allowable credit will be
recorded here and added to their other taxes.
Line
38 – this is where we will have to record the PENALTY the taxpayer will pay if they
were NOT exempt from having insurance, and (a) they had no coverage for part of
or the entire tax year, or (b) had substandard coverage (a policy that did
not meet the minimum requirements for coverage).
Line
45 – if they either received NO subsidy, or their subsidy (that was based
upon their 2012 income via the exchange) was LESS than they were entitled
to, then they would have a CREDIT here for the difference between their
allowable subsidy and what they actually received.
Now
in order to fill in those three blanks, you will almost certainly need to fill
in proposed form 8962. The schedule will need to be filled out by every
taxpayer who purchased insurance through an exchange, and
(a) received a subsidy, or (b) is eligible for a premium tax credit! It would
be fair to say that the individuals who are most likely to need this form or
those least likely to understand how to fill it out.
That
means the folks are going to need their tax preparer to fill it out. Assuming
that tax preparers are still desiring to make a profit from helping taxpayers
fill out their tax returns, the cost of filling out additional forms will
result in higher costs to the taxpayer.
Remember
that the marketplace formula for calculating the advance premium credit uses
the 2012 income of the taxpayer in determining their
credit. If their income in 2014 was HIGHER than 2012, then most likely
they received an excessive credit toward their premium –
and it will be payback time on the 2014 return!
Here
is the draft form 8962. Remember – it is ONLY required if
insurance was purchased through the marketplace – period!
Any
employer plan or individual plan has no credit applicability.
HOWEVER,
a penalty (individual mandate) MAY still be required if the employer’s
insurance was sub-standard (not up to par with the least costly Obamacare plan)
or coverage was not in place for the full year, or some family members were not
covered (who had to be covered under the rules).
None
of the above takes into consideration the rules for businesses, corporations,
non-profits, and tax exempt organizations, and costs they must pay their tax
preparers to insure compliance with the new rules and/or pay various fines for
failure to comply.
If
you are having difficulty with your 2014 tax return, and would like help
understanding all the latest changes, the tax preparation division of
Demetriou, Montano & Associates stands ready to help. Call 888-987-1040 and
discuss your needs with us today.
