As you compile your 2014 income tax documents, know that there will be a new line item on the federal form – because of the Affordable Care Act.
The item will ask whether you had health insurance last year. If you did not have coverage for the entire year, you may face a penalty. If you bought a plan on the federal exchange, you may also have to do additional calculating.
Chris Felton, a senior tax manager at Sattell Johnson Appel, says many people should breeze through the change.
"For those individuals that have had health insurance coverage for the entire year through their employer or under parents' coverage for example, will simply need to check a box on the tax return saying, yes I had full-year coverage,” Felton says.
Yet, for those who went several months without a plan, they’ll have computing to do.
“They’re going to have to calculate their penalty, and I don’t believe it’s a very complicated calculation. It’s really based on how many months out of the year they did not have coverage and also their household income for the year,” Felton says.
Felton says for an individual with an annual income of $19,000 or less, the maximum penalty will be about $95. For a family of limited means, $285. But as income increases, the penalty could reach one-percent of adjusted gross income.
Felton says there are 19 exemptions to the penalty, and taxpayers who claim one, must complete and submit an additional form. She says the federal marketplace must grant certain exemptions and will do so, by assigning the taxpayer a certificate number.
For people who purchased health plans on the federal exchange, Felton says they'll have to file an additional form - Form 8962, and it will determine if any federal subsidy the person received, was accurate, based on how income changed from 2013 to 2014.
