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The Daily Signal
Obamacare Makes
Tax Time More Taxing
Alyene Senger
February 06, 2015
As Americans begin to file their 2014 taxes, they will encounter some
new forms and paper work, thanks to burdens imposed by Obamacare’s
flawed policies.
First, taxpayers now must report their health insurance coverage status
and that of their dependents.
Those who were uninsured in 2014 either must file for one of the
individual mandate’s exemptions if they are eligible or pay the mandate
penalty of $95 or 1 percent of income, whichever is greater. The
penalty grows in 2015 and 2016 to the greater of $325 or 2 percent of
income and $695 or 2.5 percent of income, respectively.
Second, when those who received Obamacare’s premium tax credits in 2014
enrolled in coverage, the amount of their credit was calculated based
on their estimated income for the year. For most enrollees, those
credits were then paid in advance to their insurer each month, who
subtracted that amount before billing them for the balance of their
premium.
Now, as part of their tax return, those individuals will have to
calculate what their correct premium tax credit should have been based
on their actual 2014 income and reconcile the amount of credit they
actually received in 2014 with what they should have received.
They will need to do that on Form 8962—a new two-page, 36-line tax form
(accompanied by a 15-page set of instructions containing three
additional worksheets)—which they then must attach to their Form 1040.
But to fill out Form 8962, they first will need to receive from the
exchange their copy of Form 1095-A providing the information they need
to complete Form 8962.
If a tax credit recipient’s income fluctuates, which happens more
frequently than many realize, the subsidy amount changes from month to
month based on an individual’s eligibility.
Those whose income decreased throughout the year and thus qualify for a
higher premium tax credit than initially determined receive a tax
refund for the difference.
Repayment of the excess subsidy is capped for those earning less than
400 percent of the federal poverty level. For those who earn less than
200 percent of the federal poverty level, repayment is capped at $300
for individuals and $600 for families.
For those between 200 percent and 300 percent of the federal poverty
level, individuals are capped at $750 and families at $1,500. And for
those who earn more than 300 percent of FPL, but less than 400 percent,
repayments are capped at $1,250 for an individual and $2,500 for a
family.
Enrollees who phase out of premium tax credit eligibility altogether
(incomes above 400 percent FPL) will be required to repay the entire
Obamacare subsidy they received.
Thus, if subsidized Obamacare exchange enrollees didn’t report
increases in their income throughout the year, they could be
responsible for repaying the IRS substantial amounts of money.
Both the individual mandate penalties and tax credit repayments are
likely to upset and potentially surprise consumers—and surely can be
expected to add to the law’s continued unpopularity among Americans.
Read this and other articles at The Daily Signal
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