Thousands of taxpayers could face unexpectedly smaller refund checks, or even tax bills, because of the Affordable Care Act. Beginning this tax season, taxpayers have to pay attention to the tax credit, new checkboxes and new forms that pertain to the 2010 health-care law.
Regardless of what form that you use to file (1040, 1040A, 1040EZ), you must indicate that you have health insurance, such as through one of the marketplaces that was created by the Affordable Care Act and opened in 2014, an exemption from having to buy health insurance or no coverage.
Taxpayers who don’t have health insurance may file Form 8965 to claim an exemption from a penalty, says Mark Steber, who is the chief tax officer at Jackson Hewitt.
Healthcare.gov lists 24 exemptions. An example: Uninsured consumers could avoid penalties if they had medical expenses that they couldn’t pay in the past 2 years. Steber says an exemption could be made in more cases. (TurboTax has a free exemptions tool at turbotax.intuit.com/health-care/exemptions.)
If no exemption exists, the penalty for 2014 is $95 per adult and $47.50 per child—up to $285 total—or nearly 1 percent of the household income, whichever is higher.
One of the more complicated aspects involves the premium tax credit, Steber says. During 2014, many consumers who obtained coverage through a state or federal exchange received a tax credit in advance, which was called a subsidy. Now, those consumers have to calculate whether they received the correct amount of credit on Form 8962. The new Form 1095-A, which is sent if insurance was purchased from the marketplace, indicates the amount of coverage and tax credit that was received.