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New Tax in 2014: Your Shared Responsibility Payment

Are you responsible for your health care coverage?  The government says “yes.”

You’ll remember all the “hoopla” about whether the government could legally require us to maintain health care insurance. The Supreme Court decided this rule was nothing more than a tax on citizens, and therefore permissible. So, expect to find some new boxes to check when you fill out your 2014 Form 1040 next year.

If you were insured all year long, no problem. Simply check the box on the form to confirm your health care coverage.

If your household income exempts you from paying your share, you must complete another form to claim that exemption. Of course, in cases of hardship you may also qualify for free or subsidized health care through the Marketplace.

Note the government offers to subsidize health care coverage, provided participants follow all the rules and support their need for assistance. During September, about 360,000 householders were expected to receive letters requesting confirmation of income. Those who don’t provide the confirmation may discover their subsidies reduced or eliminated.

If you were uninsured and don’t qualify for an exemption, you must make your “shared responsibility payment” (read “pay the tax”).

The payment for 2015 (the 2014 tax year) isn’t too tough:

  • $95 per adult in your family and $47.50 per child to a maximum of $285 or
  • 1% of your household income above the tax return filing threshold for your filing status, whichever is greater.

These fees seem designed to gently encourage compliance with the government’s mandate. They’ll increase over the next two years, until tax year 2016 when the fees increase to:

  • $695 per adult and $347.50 for children under 18 or
  • 2.5% of household income over the filing threshold, whichever is greater.

Add the cost of hiring a CPA to help you figure out your tax owed and buying health care coverage may start to look more appealing. On a brighter note, at least the CPA’s cost falls under the heading of Miscellaneous Deductions for next year’s taxes.

Please get in touch if we can help you:  Office@CPAsite.com or 904-396-5400.

 

 

Posted 9/24/14

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