There is so much talk in the news about the Affordable Care Act, or Obamacare because of this year’s open enrollment period. Here are some commonly asked questions about how Obamacare affects your taxes.
Does everyone need to have health insurance coverage?
The Affordable Care Act requires you and each member of your family to have basic health coverage. You must either qualify for an exemption from the requirement to have coverage, or make an individual shared responsibility payment (penalty) when you file your federal income tax return. If you are not required to file a tax return you do not need to file a return solely to report your coverage or to claim an exemption.
I get advance payments, also known as a subsidy, for my Obamacare coverage. What happens if I don’t file or I don’t reconcile my advance payments of the tax credit when I file my return?
Failing to file a tax return or filing your return without reconciling your advance payments will delay your refund and may affect future advance credit payments. The IRS will send you a letter with instructions to resolve this issue, which may include submitting Forms 1095-A and 8962.
If you have not yet filed your return for 2015 IRS has announced they will discontinue your Marketplace payments for 2017.
I can’t afford to pay for Obamacare or other insurance what is the penalty that I will incur?
In 2016, the penalty jumps to $695 per adult and $347.50 per child under 18 (with a family maximum of $2,085), or 2.5% of your annual household income above the tax-filing threshold, whichever is larger. You pay this fee on your tax return for 2016.