Home Business This tax season may be tougher than most

This tax season may be tougher than most

This tax season may be tougher than most
This tax season may be tougher than most

January 11, 2015 :This tax season will be more taxing than most, some taxpayers will find.

As more provisions of the Affordable Care Act go into effect this year, tax preparers are already warning people that they may have complicated returns to file if they purchased medical insurance through a federal or state health insurance marketplace or decided not to buy health insurance.

“This year is the big year that it will affect all Americans,” said Mike Surden, a partner at Independence Tax Service in Doylestown. “It’s going to be a lot more work for us because of the Affordable Care Act.”

“We’ll all muddle through this together,” added Kathi Atkinson, Surden’s partner and another enrolled agent in the Independence Tax Service office.

For most filers who have health insurance through their employer, the change this year on their tax return amounts to checking off a box.

That’s it, said Jennifer Jenkins, the Internal Revenue Service spokeswoman for Pennsylvania, Ohio and West Virginia. “For most folks, all they will have to do is check a box.”

But Americans who bought health insurance through the newly established federal Health Insurance Marketplace or a similar state marketplace (Pennsylvania does not have one) will need to file a 1095 A form showing they purchased the insurance and if they qualified to receive a “premium tax credit” to help pay for it based on their anticipated income for 2014. The form should be provided from the marketplace. Look for it in the mail, Surden and Jenkins said.

If a person who received a premium tax credit’s income turned out to have been less than what was expected, he or she may receive more of a tax credit. The person could also be charged a tax if the credit had been advanced and his or her income turned out to be greater than expected, Surden explained.

Those who didn’t purchase health insurance will need to file with the marketplace or with the IRS for an exemption, showing one of 14 reasons why they didn’t buy coverage for themselves and/or their dependents. They will have to provide documentation to back up the reason they are seeking an exemption certificate number (ECN) that will be used to allow them to not pay “shared responsibility payment,” the IRS’s term for the tax to be charged those who don’t get health insurance.

If they qualify for an exemption, they will receive the exemption certificate number in the mail. It will be used on the tax form to qualify for the exemption on the tax return.

If they don’t qualify for an exemption, well, it’s time to break out the antacids. These tax filers will have to pay a “shared responsibility payment” based on their income.

“If you are a late season filer, get started now” on gathering the paperwork you may need to claim an exemption, Surden said. For example, if someone is claiming an exemption because they filed for bankruptcy, they will need to have a copy of the bankruptcy filing submitted with their exemption application for an ECN.

In a statement, the secretary of the Department of Health and Human Services said the federal government will provide assistance to those who need help filing their returns.

“Last year, millions of Americans purchased quality, affordable health coverage through the marketplace, and the vast majority received tax credits that cut their monthly premiums,” said Secretary Sylvia M. Burwell. “This benefit, which in many cases helped make the cost of health care less than the cost of a cellphone or cable bill, enabled these consumers to enjoy the benefits of coverage throughout the year. In the coming weeks, HHS will work with other agencies, tax preparers and community organizations to arm these consumers with the information they need to know as they prepare to file their taxes. We will also be providing helpful tools so that the millions of taxpayers who qualify for an exemption can receive one.”

Source theintell.com


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