Affordable Care Act tax implications

January 22, 2015

Greg Guidone,

Filing taxes will be a bit different this year because of the affordable care act.

For many, the change will be as simple as checking a box on their 1040. But that’s for families with insurance.

If you didn’t have health insurance last year, you’ll have to pay.

The federal government calls it a “shared responsibility payment”, but it amounts to a penalty for not being covered.

“It’s going to be a per person penalty.” Said Cathy Fulmer, the General Manager at Liberty Tax Service in Salisbury. Fulmer shed some additional light on the penalty saying, “if your children are covered, fine, but also the husband and wife would have to have insurance.”

Here’s how the penalties break down:

This year (the 2014 tax season) the penalty is $95 or 1% of your income which ever is more.

So if you make $250,000 a year, you won’t pay $95, you’ll pay $250. Next year it’s a $325 fine or 2% of income. In 2016 and every year afterward it jumps to almost $700 or 2.5% of income.

When discussing the possible exemptions from the penalty, Fulmer said “unfortunately we’re all going to be faced with that, either having coverage or paying a penalty.”

It’s also the first time American households have to declare the health insurance status of all members.

So for families that means children. For each child uninsured a penalty of $47.50.

Certain citizens can be exempt from those penalties.

Some of those who qualify include: