We’ve been talking about it for years, but this is the year the Affordable Care Act finally shows up on your tax return. The health insurance mandate imposed by Obamacare was implemented last year, and now it’s time to pay the piper if you didn’t sign up for coverage.
Even if you have health insurance, you’ll have an extra step or two to complete on your tax return this year. Money Talks News finance expert Stacy Johnson explains more in this video. See what Stacy has to say, and then read on for the details.
Insurance comes from Uncle Sam, your boss or your wallet? Check a box.
We’ll start with the scenario that applies to the vast majority of Americans. Do you get your health insurance in any of these ways?
- Workplace benefit
- Other government source such as the VA or military benefits
- Individual policy purchased on your own (i.e. no government subsidy)
If you’re in any of these categories, all you need to do is check a box on line 61 of the 1040 form saying you had health insurance. That’s it. You’re done.
So for most people, Obamacare doesn’t complicate matters much, if at all. Yet publications like Forbes put knots in people’s stomachs by publishing recent articles like Think Filing Taxes Was Tough Before Obamacare? Just Wait.
Government helped cover your premium? Fill out a form.
That only leaves two groups of people: those who received government subsidies to help them buy health insurance, and those who did not have health insurance at all for some period during the year. While in the minority, this group still encompasses millions.
Let’s talk next about those who received a subsidy.
First, you should be on the lookout for Form 1095-A to arrive in the mail. You should also be able to download it from your Health Insurance Marketplace account, if you have one. In case you’ve forgotten, that account can be found at HealthCare.gov, and you’ll find the form in the “Messages” section of your account.Then, when you do your taxes, you’ll need to fill in Form 8962. Admittedly, if the 1040 form scares you, Form 8962 will appear terrifying. It has lots of boxes and plenty of calculations that are sure to have you chewing your pencil down to a nub.
Never fear. Online software programs such as TurboTax, TaxACT and H&R Block will walk you through questions that make it so easy to complete the form you may not even realize you’re doing it. If you can’t imagine doing your taxes online, check out this article for suggestions on how to find some free face-to-face tax prep.
If your 2014 income was higher than expected, you may find your subsidy was greater than it should have been, and you may have to pay a portion back. If not, you simply attach the form to your tax return, and submit it along with your 1040.
Didn’t get health insurance? That will be $95 please.
Finally, we come to those of you who, for whatever reason, didn’t have health insurance last year. If you’re in this category, get ready to pay the price.
The tax penalty for not having coverage in 2014 is the greater of $95 per adult and $47.50 per child (maximum of $285 per family) or 1 percent of your household income above the filing threshold, which is about $10,000 for a single individual.
If you do have to pay the tax, you’ll enter it on line 61 of your 1040 form.
However, before you automatically pay the fee, make sure you aren’t exempt. The law allows certain individuals, such as those for whom buying health insurance is a financial burden or those with religious objections, to go without coverage and without penalty. You can find a list of exemptions and how to apply on the government health care website.
What’ll it be for you? Check a box, fill out a form or pay a penalty? If you feel like sharing, do so in the comments below or on our Facebook page.
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