Isn’t it great that the negative ads of this year’s midterm elections are over? What a nasty race for Florida governor! Now, the news is focused on the Affordable Care Act.
A lot of my clients ask me “will health care reform will have an affect on my taxes?” The answer is yes and here is how:
- HEALTH INSURANCE REQUIREMENT – As of this year, Americans, except those who have an exemption, are required to have health insurance and to report it to the Internal Revenue Service (IRS). The agency will monitor who is covered because taxpayers will have to report their coverage when filing their yearly taxes. You must be covered by your employer, receive Medicare or Medicaid, or buy your own insurance. If you don’t purchase insurance, you’ll have to pay a penalty.
- TAX REPORTING – This year, there will be a new line on your W-2 Form. This is where employers will report the value of your health care plan to the agency. This number will also tell you if you’re eligible for a tax credit or for a penalty.
- PENALTIES – If you’re not covered by your employer, qualify for Medicare or Medicaid, and you don’t purchase health insurance, than be ready to pay. The penalty for someone who is non-insured starts at $95 or 1% of your income, whichever is greater. Ask your accountant for details or e-mail me at Elizabeth@brigadebookeeping.com, for more information.
- TAX CREDIT ELIGIBILITY – Those purchasing insurance through the Health Insurance Marketplace might be eligible for a tax credit to help pay for coverage, depending on household income. Here is an example of qualifying income ranges in 2014:
- Between $11,670 and $46,680 for one individual.
- Between $15,730 and $62,920 for a family of two.
- Between $19,790 and $79,160 for a family of three.
- Between $23,850 and $95,400 for a family of four.
Knowing the possible implications of health care coverage and your taxes is important. With open enrollment now underway, now is the time to ask questions and be informed.