In the many years of prepping for taxes, the filing of the 2014 tax year will mark a new era for individuals and tax preparer. This is the first tax year the Affordable Care Act, dubbed as ObamaCare, will affect the way people file and determines if they owe the government more than usual. What do you need to know? Check out the brief check list, but when in question, it may be wise to visit a local CPA, or a center like H&R Block, who is offering free classes to understand how ObamaCare can affect you.
☑ Qualifying coverage for 2014?
If you were under an employer covered health plan, or additional insurance like Medicaid, simply select the check box that indicates you did have coverage in 2014. On form 1040, that would be line 61. This is not the time to be in doubt, it can be linked with serious consequences. If unsure contact your insurance holder to confirm the status.
It doesn’t automatically mean if you didn’t have insurance, you will be facing a penalty. Instead, check out IRS Publication 5187 to review the approved list of exemptions, to see if any apply to you and note on the form as necessary. 2014 is expected to have a lesser penalty than 2015 and years going forward. It is already estimated the penalties for 2015 will be nearly quadrupled from 2014 which is an average of $95. The cost per uninsured child is $47.50, with a current maximum of $285.
For 2015, expect the penalty to be kicked up to $325 per adult and $162.50 per child/dependent. Or a max of 2 percent from the adjusted income.
☑ Forms you need to look out for?
Under IRS policy, insurers must send out Form 1095 to taxpayers. This will explain the months of qualifying coverage. The form will also be copied to the IRS. For those who signed up under the government-sponsored Marketplace, be on the lookout for 1095-A.
Families who opted for the government-sponsored insurance option, can see a credit on their taxes. Instead of accepting it as a part of the return, taxpayers will have the option to apply towards a future estimated amount.
☑ Help for the elderly?
The IRS does financially back the Volunteer Income Tax Assistance and the Tax Counseling for the Elderly. Those who need assistance, can visit the IRS website to select “Find a VITA Site Now” for review. The program is aimed for adults 60-years old and higher, and specifically for seniors making less than $53,000 annually.
☑ When in doubt, seek help.
This first tax year with ObamaCare included should be fully reviewed by a professional, if you still have a lot of questions. There are local accountants, CPAs and tax preparers that are educating themselves about the law, and they can help you navigate through the ball of red tape.