If you’re still not clear on how the Affordable Care
Act will affect your tax situation, don’t worry - you’re not alone. Brian
Haile, our SVP of Healthcare Policy, has put together a list of five things
taxpayers should be aware of when it comes to the ACA and how the Tax Pros at
Jackson Hewitt can help.
may be more than many taxpayers think: Folks may already know that if they don’t have health insurance in
2014, they may face a tax penalty when they file their taxes in 2015. And while
the penalty could be as low as $95, for those who fail to get “minimum
essential coverage” that tax penalty that is considerably larger. The IRS will
deduct this penalty from the next year’s tax refund.
Our ACA X-Ray provides a customized penalty calculation for our customers, and
our penalty worksheets help to illustrate this issue more broadly, so taxpayers can be clear
on what penalty amount they may be facing if they don’t secure health
deductions may change for some taxpayers: Customers under the age of 65 will face new limits on excess medical deductions on their 2013 returns as a result of the ACA.
The number of individuals to whom this may apply may be small, but the
impact to those who are affected will be substantial -- as will the effect on
coverage costs can be tough: Customers who want to purchase a qualified health plan may have a
hard time estimating their premiums right now at healthcare.gov, so they may be
unsure how much of their refund to "set aside" to help cover the new
premium obligations. Jackson Hewitt’s ACA X-Ray along with licensed agents
at Getinsured help give tax prep customers complete, timely information in a
way that they have not been able to get it through healthcare.gov. This
is particularly important now since employers have already started telling
employees that they have dropped or plan to drop employer-sponsored coverage.
tax credit isn’t for just ANY insurance: Many customers may have heard that they can claim the new tax credit
for any coverage that they purchase in the individual market. But, this
is not true: the ACA clearly
limits the credits for qualified health plans sold through the new exchange
marketplaces. Those who are not clear on this point are in for a financial
shock next year.
estimates of income and costs may mean adjustments to next year’s taxes: Customers who accept the advance payments of the
tax credits for qualified health plans will face the "reconciliation"
process next year. This is the process in which they compare their actual
earned income versus what was estimated when calculating the tax credit amount.
If they received a larger credit than they actually qualified for, taxpayers
will need to repay some of that credit back. The IRS will deduct this
reconciliation balance from the 2014 tax refund. However, the opposite is also
true. If a taxpayer overestimated their income and received a smaller credit,
and ended up earning less money than they thought in 2014, they could be in for
a larger refund.
means more things for you to figure out. We’re here to help. Find out more
about the ACA at JacksonHewitt.com or visit your local tax professional.