Monday, December 22, 2014

What you should know about the Affordable Care Act and your taxes

The IRS is headed for some challenges in the future. The recent budget cuts are going to hurt its ability to collect any outstanding taxes. The cuts will also affect the IRS's new role as overseer of the Affordable Care Act.

The IRS has been assigned with the duty of keeping the public aware of any tax provisions associated with the act. But the impending budget cuts have forced the agency to place a temporary hiring freeze. With tax season around the corner, that is a problem to the government, the agency, and the public.

As a taxpayer, you should stay abreast of the latest requirements under the ACA to avoid future problems. The IRS has several links available to the general public that can be found at http://www.irs.gov/Affordable-Care-Act/Affordable-Care-Act-Tax-Provisions.

Here's what you should know:
  • The ACA requires everyone to be covered by health insurance. If not, taxpayers must either file for an exemption or pay a fee under the Individual Shared Responsibility Provision. That amount is determined by calculating one percent of the entire household income and comparing it to the set fees of $95.00 per adult or $47.50 per child. Depending on your income level and the size of your family, the fee can vary. Taxpayers are required to pay the higher figure under both methods.
  • Whatever your status is at the time you file for a return - covered, exempt, or uncovered - it must be reported to the IRS.
  • Those enrolled in healthcare through the online marketplace are eligible for a tax credit, which varies according to the size of the family and coverage type. Taxpayers have the option to use this tax credit in advance to cut their insurance premiums, or deduct it on their tax return.
Visit the IRS website for more information and either call the agency or your taxpayer with any questions.

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