Obama Care - Health Insurance Law taxes

There are many new tax rates and fees but our concern is the many new individual tax rules concerning medical insurance coverage that affect everybody. The law says everybody will have medical insurance or pay fines to be uninsured. This all comes together for the first time when filing 2014 federal tax returns.

There is a checklist for all individuals asking if you have medical insurance coverage. Then the exceptions apply. Without exceptions there are fines owed on the federal returns ranging from $95 to 1% of Household Income. There are also payments or credits due for people who were advanced credits to their ACA medical insurance based on estimated income. Accordingly, the income on the tax returns for last year would likely be higher or lower, resulting in additional taxes owed or refund credits.

Our software provider is providing input forms for us to determine exact outcomes of the above, which will require additional tax preparation time.

Employers were not required to report employees covered by medical insurance, to the IRS last year.

It is worth noting that the IRS was supposed to hire 16,500 additional auditors for the ACA medical tax program. Instead, their budget was not increased [it was actually cut a billion] and they retired 13,000 people. As a result computer compliance checking for forms accuracy and completeness will probably the only test for this first year. We expect only a random check of returns for compliance.

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