Since its passage five years ago, Obamacare’s implementation has been repeatedly delayed. This year, however, key provisions that will impact our tax filings have been implemented, and the effect they will have during tax season will be highly complex. A survivor’s guide is in order. 

Many citizens will discover only during tax season that they owe penalties under the Affordable Care Act. Others who have received subsidies under the ACA will learn that they will be receiving smaller refunds than they expected, or that they in fact owe the IRS money. 

The ACA is not merely a health care law. It made profound changes to our tax laws. The law requires most Americans to prove that they have health insurance. And it is the IRS that we must prove this to. You will also be required to indicate whether you received tax credits to help pay for that coverage.  

The individual mandate is also now in effect, so if you didn’t have coverage in 2014, you will be required to pay a fine. Many people in the tax filing industry believe that the penalties for non-payment of this fine will not be enforced. The law is unpopular, and the party that passed it is in the White House and controls the IRS, so they may direct to IRS to let it slide. We are not advising non-payment by the way, just reporting on pervasive rumors among tax preparers. 

You will also be impacted if you are in a lower income bracket, and are entitled to subsidies under the ACA to help you purchase health insurance. The law was written in a way that will reduce the tax refund for most such people, and in many cases, they will end up owing the IRS money.  

This is because the tax credits they received, which were based on estimates at the time they were granted, may have been larger than what the law permits. And it is now payback time. H&R Block has concluded that up to half of the 6.8 million taxpayers who received subsidies last year may actually owe money to the IRS.  

It was originally contemplated that employers would send to the IRS lists of employees with employer-based health coverage. As it turns out, there will be more self-reporting this year than was expected.  

Many taxpayers may simply skip the question about health coverage, reasoning that if they don’t answer, they can’t be penalized. Further complicating the picture is the possibility that tax filing software may have a default setting of either yes or no for that question. On top of all of this is the fact that filers file under penalty of perjury.  

Will mass non-compliance be the next chapter in the story of the ACA?



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