In 2014 Obamas Affordable Health Care Act kicks in and will affect millions of individual Americans. You need to understand your “shared responsibility payments” and your exemptions. We will be covering these issues in our 3 part series on Obama Care.
In Part 1 we are giving a general overview of these two primary issues that will affect millions of individuals in the upcoming month, “shared responsibility payments (tax)” and exemptions. If you have any questions concerning Obama Care feel free to call us at (562) 251-1300
So What Are Shared Responsibility Payments?
The term “shared responsibility payment” refers to the Obamacare individual mandate tax, one of at least seven tax hikes in the healthcare law that directly hit families making less than $250,000 per year
What you put on your 2014 tax return may determine if you will owe an Obama tax in 2015. In the Report that the IRS put out called “Four Tax Facts about the Health Care Law for Individuals” they stated;
“Your 2014 tax return will ask if you had insurance coverage or qualified for an exemption. If not, you may owe a shared responsibility payment when you file in 2015.”
In another publication put out by the IRS they stated:
If you (or any of your dependents) do not maintain coverage and do not qualify for an exemption, you will need to make an individual shared responsibility payment with your return. In general, the payment amount is either a percentage of your household income or a flat dollar amount, whichever is greater. You will owe 1/12th of the annual payment for each month you (or your dependents) do not have coverage and are not exempt. The annual payment amount for 2014 is the greater of:
- 1 percent of your household income that is above the tax return filing threshold for your filing status, such as Married Filing Jointly or single, or
- Your family’s flat dollar amount, which is $95 per adult and $47.50 per child, limited to a maximum of $285.
It is important for taxpayers who might qualify for an exemption from having qualifying health coverage and making a payment should review a new IRS publication for information about these exemptions.
Publication 5172, Health Coverage Exemptions, which includes information about how you get an exemption, is available on IRS.gov/aca or call us we can help you get a copy of this publication.
It is also important that you understand that the Affordable Care Act calls for each individual to have qualifying health insurance coverage for each month of the year, have an exemption, or make an individual shared responsibility payment when filing his or her federal income tax return.
- Have no affordable coverage options because the minimum amount you must pay for the annual premiums is more than eight percent of your household income,
- Have a gap in coverage for less than three consecutive months, or
- Qualify for an exemption for one of several other reasons, including having a hardship that prevents you from obtaining coverage or belonging to a group explicitly exempt from the requirement.
How you get an exemption depends upon the type of exemption. You can obtain some exemptions only from the Marketplace in the area where you live, others only from the IRS when you file your income tax return, and others from either the Marketplace or the IRS.
iIknow it is complicated but additional information about exemptions is available on the Individual Shared Responsibility Provision web page on IRS.gov. The page includes a link to a chart that shows the types of exemptions available and how to claim them. For additional information about how to get exemptions that may be granted by the Marketplace, visit HealthCare.gov/exemptions.
Many tax practitioners will not be equipped to help you with many of these Obama Care issues. So please feel free to call us at (562) 251-1300 if you have nay questions or need any assistance.