North Highlands,CA (PRWEB) March 04, 2014
OMG Tax strongly believes that part of avoiding problems with the IRS is to know what the law is, what changes are coming and how to prepare for any changes in tax laws. The IRS released Four Tax Facts about the Health Care Law on February 25th, 2014 to assist taxpayers in preparing for the impacts of the new Affordable Care Act. Many taxpayers and individuals are confused by this new law and how it will affect them. It is important for taxpayers prepare for any tax consequences if you do not have qualifying health insurance for all months during 2014.
OMG Tax owner Scott Juceam has put forth answers to some common questions that have come pouring in the last few days since the IRS released the recent facts. These questions are important to have answered as they can affect your tax return for the 2014 tax year and help you to avoid new tax liabilities when you file your 2014 taxes.
1. What is qualified health insurance coverage? Any health insurance plan obtained through an approved Affordable Care Act website or state exchange or an exempted plan through an employer.
Note: the Employer Health Insurance exemption was recently extended to 2016.
2. If I have a qualified health insurance plan do I need to do anything? No, if you maintain coverage with that plan for all months during the tax year of 2014.
3. What happens if I don’t have health insurance during 2014? If you do not have health insurance coverage through a qualified plan you will be assessed a penalty on your taxes for 2014. You will be assessed this penalty when you file your 2014 tax return.
4. What happens if I lose my insurance or cannot afford my premiums? If you do not have health insurance coverage for all months during 2014 your penalty will be assessed on a monthly basis – or 1/12th of the penalty for every month you did not have qualified insurance coverage. There is an exemption if the cheapest qualified plan is more than 8% of your total reported income.
5. How much will the penalty be if I don’t have health insurance? The penalty is $95 per adult on the tax return and $47.50 per child claimed as a dependent with a maximum of $285 per household -- or 1 percent of reported income, whichever is greater. This penalty is supposed to increase over the next few years.
Recommended solutions: If you do not have health insurance coverage under a qualified health insurance plan OMG Tax recommends you either increase tax withholdings or set aside additional funds to pay for any expected penalties when you file your 2014 tax return. This will ensure that even if you do have a penalty for failure to maintain coverage with a qualified health insurance plan you will be less likely to owe the IRS, be assessed further penalties and interest and collection activity.
Owing the IRS is never something you want to do and good planning is the best way to prevent having to deal with IRS collections.