CBS: "Insured Through Obamacare? Prepare For A Tax Headache"; WaPo: "Dems Bracing For Another Obamacare Backlash"
CBS News reports, “If you're among the roughly 20 million people affected by the Affordable Care Act -- either because you bought insurance through health exchanges or will be subject to penalties or exemptions for failing to get coverage -- filing a tax return just got a lot harder. Indeed, potentially millions of people who never before had to file tax returns will now need to file as the result of the health law. . . .
“[T]he subsidies that may appear to simply lower the cost of insurance premiums are actually ‘advance premium tax credits’ that are paid directly to health insurers. Because those credits are made on each taxpayer's behalf, it's up to individual taxpayers to determine whether the ‘advance payment’ was too much or too little. Though many of these individuals have never had to file before -- they simply earned too little to be required to file -- they will now need to complete tax returns to reconcile the Obamacare subsidies they got with what they owe, according to the IRS.
“Meanwhile, those who didn't buy insurance or had a lapse in coverage that exceeded three months will need to determine whether they're subject to a tax penalty. Both situations involve slogging through new forms and dozens of pages of instructions.
“‘If you didn't have any changes in your situation over the course of the year -- everyone was covered under the policy and your income is exactly the same as it was in 2013 -- it might not be that bad,’ said Mark Luscombe, principal tax analyst with Wolters Kluwer, Tax & Accounting U.S. ‘But if you had a change in circumstances or don't have a perfectly straightforward situation, the amount of time it takes to handle this will increase exponentially.’
“Why? If you received discounted insurance through a health exchange, you'll need to fill out the mind-boggling Form 8962. Although this two-page form officially has just 36 lines, there are actually 90 spaces on just the first page that need to be filed in -- up to six spaces for each official ‘line.’ . . . To put the correct figures in several of these spaces, you'll need to complete charts and worksheets found elsewhere in the 20-page instruction booklet. . . .
“The IRS says it does not have an estimate of the time it will take taxpayers to fill out this form. Experts estimate that someone with a complex situation will spend more time on the 8962 than they will filling out all of their other tax forms combined. . . .
“The IRS estimates that about half of the roughly 6 million individuals who got subsidy payments for Obamacare got too much; the rest may actually get additional subsidy payments through boosted tax refunds. . . .
“What if you didn't get insurance through an ACA exchange? If you are covered elsewhere, either through an employer or a individual plan, you only need to check a box this year, tax officials say. (Next year, additional documentation will be required of everyone.) But if you have no coverage or had a lapse in coverage that lasted more than three months, you'll need to fill out the form 8965 to determine whether you owe a penalty or can qualify for an exemption.”
After viewing CBS's Report, yesterday’s The Washington Post article makes perfect sense. The Post wrote, “The Obamacare window technically just closed this weekend, but a new round of political headaches could just be beginning for the administration. That's because it's tax season, and many Americans could soon be getting an unwelcome surprise that they owe the government a penalty for skipping health insurance coverage. Up to 6 million Americans are expected to pay a penalty for not having coverage in 2014, according to recent Obama administration projections.”
Even more worrying, “it's likely that a lot of people who will have to pay don't know it yet,” The Post explains. “Despite the unpopularity of the individual mandate and the high-stakes Supreme Court case over it three years ago, there's still limited awareness of the penalty among those who could risk triggering it. Nearly half of uninsured Americans weren't aware of the penalty . . . .
“That means millions of people won't learn they'll have to pay the penalty until they file taxes this year, and at that point, it will have been too late to buy 2015 coverage since the enrollment deadline was Feb. 15. The minimum individual mandate penalty more than triples this year, rising to $325, or to 2 percent of income. ‘It's the fact that if you didn't apply by Feb. 15, you have no way of escaping the penalty in 2015,’ said Stan Dorn, a senior fellow at the Urban Institute. ‘It's not something that a lot of people have necessarily thought through.’”
Of course, the story notes, “To head off the potential backlash, Democratic lawmakers and groups supporting the health-care law in the past few days have urged the administration to keep the enrollment period open for people who won't figure out they owe a penalty until it's too late. . . . The administration seems to be exploring the idea of extending the enrollment period for those dinged by the individual mandate. ‘You’re going to hear from us, one way or another, within the next two weeks on whether that’s something that we would do,’ Health and Human Services Secretary Sylvia Mathews Burwell said Friday, according to Bloomberg.”
Would this mean another unilateral change to yet another deadline in the law by the Obama administration?
Tags: 2015, Income Tax, Affordable Care Act, tax pentalties, IRS Form 8962, tax headache, Obamacare backlash, CBS News, Washington Post To share or post to your site, click on "Post Link". Please mention / link to the ARRA News Service. and "Like" Facebook Page - Thanks!
Posted by Bill Smith at 12:36 PM - Post Link
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