The Patient Protection and Affordable Care Act includes health insurance and tax law changes. Several measures of the Affordable Care Act, also known as Obamacare, have been implemented, but the most significant changes take effect in 2014 and 2015, including:
Requires most Americans to have qualified health insurance as of Jan. 1, 2014. Coverage can be obtained through employer-sponsored plans, government programs such as Medicare or Medicaid, private plans or through the new federal or state marketplaces, also called health insurance exchanges.
Premium tax credits and financial assistance:
Available to qualifying individuals who don't have access to employer-provided coverage and purchase health insurance through a marketplace. Eligibility and amounts are based on the cost of marketplace premiums and your household size and income. The credit will be paid directly to the health insurance company to help cover monthly payments. If you elect to receive a lesser credit or no credit at all, you can claim the refundable credit on your 2014 tax return (due April 15, 2015).
Tax penalty for uninsured:
If you don't have health insurance for a total of 3 or more months in 2014, you may be subject to a penalty payable on your tax return due April 15, 2015. The amount is based on the number of uninsured individuals in your household and household income.
Small business mandate:
Starting in 2015, businesses with more than 50 FTE employees in 2014 (or a combination of full-time and part-time employees equivalent to 50 FTE employees) must either offer a minimum level of health care coverage to employees and their dependents, or pay the IRS Employer Shared Responsibility payments for any FTEs who purchase coverage through a marketplace and receive the premium tax credit.
Changes impacting your 2014 tax return:
Stanek Tax Services will navigate all the ACA changes plus hundreds of deductions and credits for you but here's a summary of how the ACA impacts federal tax returns due April 15, 2015:
As of January 1, 2014, most Americans are required to have minimum essential health insurance. For most taxpayers, this means little or no changes to your taxes.
If you had employer-provided insurance for most of 2014, or you purchased coverage through a private exchange or directly from an insurance company, the ACA's insurance mandate won't impact your taxes. (Note: You may receive IRS Form 1095-B and/or 1095-C from your employer or insurance company in Jan. 2015, but you don't need to report that info on this year's tax return.)
If you purchased insurance for 2014 from a marketplace, you'll receive IRS Form 1095-A in Jan. 2015.
If you received the advanced premium credit in 2014, that information will be on your Form 1095-A. You may receive a bigger tax credit or have to pay back some or all of the credit if your actual income is more or less than the amount you estimated at the time you purchased coverage from your marketplace.
If you did not have insurance for 3 or more months in 2014, you may be subject to a penalty (also known as an individual shared responsibility payment) that you must pay when filing your taxes. The penalty is 1% of your 2014 income or $95 per adult – whichever is higher – and $47.50 per uninsured dependent under the age of 18, up to $285 total per family.
IMPORTANT! If you were uninsured and plan to claim an exemption in order to avoid the penalty, go to www.healthcare.gov/exemptions to see if you need to file an exemption application. Be sure to mail your exemption application as soon as possible because processing can take several weeks. If your application is accepted, you'll be issued an exemption certificate number (ECN). Since you must report your ECN on your tax return, don't wait to apply - doing so could delay processing of your tax return and your tax refund!
If you paid for medical or dental expenses in 2014, you may be able to get a tax deduction for costs not covered by insurance. The IRS wants you to know these facts about claiming the medical and dental expense deduction.
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