Think Filing Taxes Was Tough Before Obamacare? Just Wait

The Affordable Care Act, aka Obamacare, is part health law, part tax law. Some feel benefited by the law, some burdened by it. And one’s perceptions about that can change over time. Either way, you may be annoyed by the extra forms and extra tax compliance, even if your tax bill doesn’t go up. The IRS has a far more important role in the law than you might think.

This year for the first time, the Affordable Care Act has created a trickier tax season. It is more expensive too, as virtually all Americans filing tax returns will have to consider the law’s impact on them and their taxes. There is likely to be considerable confusion this first year, and probably many mistakes. Yet many expect the IRS to be lax for a time. The agency is already stretched thin, and tax season looms large, especially this year.

A major feature of the law is a mandate requiring that most Americans must carry health insurance. In its simplest, that means you must state on your tax forms whether you have coverage. You also must say whether you got tax credits to help pay for it. If you did not have coverage in 2014 as required—and you are honest and say you didn’t—there’s a fine. Yet if you fail to pay it, many in the tax filing business think you may slide by without incident.

On the other hand, if you are entitled to subsidies, your tax refund is likely to go down. In fact, your refund may go down so much that you may even owe the IRS money. The subsidy process is confused and many people who received subsidies are likely to owe the IRS. Why? Because there is estimating involved, the tax credits they received to offset their insurance premiums may have been too large.

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In fact, H&R Block estimates that up to one half of the approximately 6.8 million taxpayers who got subsidies in 2014 may have to send money back to the government. Tax preparation firms are trying to gear up to provide the kind of hybrid health insurance tax law advice that consumers are needing this year. But like any new system, there are likely to be some hiccups. It will also be one more reason taxpayers may need tax professionals, even if their situations seem simple.

Read the rest of the story HERE.

Related story:

New tax forms to be sent for Obamacare

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