When filing your 2014 taxes this year, you must be aware of a certain change that can affect how much you owe the government. This is the first year in which Obamacare, also known as the Affordable Care Act, will be taken into consideration in your tax filings.
If your health insurance was covered by your employer or you had some additional form of health insurance, you must indicate that on your 1040 form. Make sure to do so, or you will be considered not covered, which will definitely lead to financial penalties. This penalty could be an average of $95 with the penalty for each uninsured child being $47.50. These fees are sure to increase by 2015’s tax filings, so it’s important to be covered as soon as possible if not already.
This shouldn’t be too big of a change for most people, but the bigger change is for those who purchased a private health plan in government-run exchanges or went some of the year without being insured. The LA Times states that, “40%-50% of families that qualified for financial assistance might have to repay some portion because their actual household income for 2014 was higher than what they estimated during enrollment”. These repayments can range from small amounts to anywhere near thousands of dollars.
For California specifically, more than 1 million policy holders will receive a tax notice starting January 20th. This notice can help fill out the new 8962 tax form, which will assist in calculating the actual amount of subsidies a family was eligible for in 2014. Families of four who make up to $94,000 may qualify for subsidies while individuals earning up to $46,000 may as well.
What’s important to remember is that open enrollment ends February 15, 2015 for those who are not yet covered. In order to avoid any penalties in the future, you must enroll by this date. As for this year, the California Covered has increased the staff at its service center to answer anticipated tax questions for filing this year. Many centers like H & R Block will be offering free classes on understanding how Obamacare will affect your taxes.
You may even ask a specialized tax lawyer in your area about any questions you may have on Obamacare and how to properly file your taxes this year. It’s better to be safe than sorry and have to pay any unnecessary financial penalties.