Will Obamacare Ruin Your Tax Refund?

Life comes with only two certainties: Death and taxes. When those two issues cross in some capacity, you can count on life becoming more complicated. This tax filing season will be the first year that taxpayers deal with the Affordable Care Act, also known as Obamacare. The controversial law strives to make health care more affordable to lower-income households, but it may also unexpectedly lower tax refunds.

According to H&R Block, as many as 3.4 million people who 
received subsidies for health insurance will have reduced tax 
refunds this year due to underestimating their income.
(Photo: LM Otero, AP)

Most people must carry health insurance or pay a fine. Americans making less than four times the Federal Poverty Guideline based on household size may receive subsidies that reduce their monthly insurance premiums. Non-exempt Americans not covered by an insurance plan face a penalty from $95 per person to 1% of household income, whichever is greater. Whether receiving a subsidy or paying a fine, both aspects will be addressed on tax forms and have the potential to surprise filers.

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According to H&R Block, as many as 3.4 million people who received subsidies for health insurance will have reduced tax refunds this year due to underestimating their income. Vanderbilt University assistant professor John Graves told the Wall Street Journal that the average subsidy amount is expected to be about $208 too high for 2014. While some tax filers may have to return hundreds or thousands of dollars back to the IRS, there is a $2,500 cap on paybacks.

Read the full story HERE.

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