Affordable Care Act (ACA – ObamaCare)
THE Individual Shared Responsibility provision of ObamaCare requires taxpayers to either:
• Have qualifying health care coverage,
• Qualify for an exemption, or
• Make a payment.
1. Qualifying Health Coverage:
• Qualifying coverage (minimum essential coverage) includes coverage from employers, Medicare, Medicaid, CHIP, and Health Insurance Marketplace.
• For each month that anyone on your return did not have qualifying health care coverage or exemption, you will need to make an individual shared responsibility payment.
• If you and everyone else on your tax return had health care coverage, check a box to report that coverage.
2. Claiming a Health Coverage Exemption
• You may qualify for health coverage exemption if you meet one of the following:
• You did not have access to coverage that is considered affordable because the annual premiums were more than eight percent of your household income,
• You had a gap without coverage of less than three months, or
• You qualified for other exemptions, including having a hardship that prevented you from obtaining coverage or you were a member of a group explicitly exempt from the health coverage requirement.
• How you obtain health coverage exemption depends upon the type of exemption. You must apply for exemption through the Marketplace. Other exemptions are claimed only when filing an income tax return.
• Unless you obtain your health coverage exemption through the Marketplace, you must claim the exemption on your income tax return. Use Form 8965, Health Coverage Exemptions, to report a coverage exemption granted by the Marketplace or to claim a coverage exemption on your tax return.
3. Making an Individual Shared Responsibility Payment
• If anyone on your tax return does not have health care coverage for each month and does not qualify for an exemption, you must make a shared responsibility payment when filing your federal income tax return.
• The annual payment amount is the greater of:
• 1% of your household income above the filing threshold for your filing status, or
• $95 per person ($47.50 per individual under age 18), but limited to a family maximum of $285.
• You will owe 1/12 of the annual payment for each month you or another person on your tax return does not have either qualifying health care coverage or exemption. Your individual shared responsibility payment cannot exceed the national average premium for a bronze-level health plan available through the Marketplace which is $204 per month per person for 2014.
• These penalties are scheduled to increase next year. And the year after. Sorry.
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Sy Al-os Accountancy Corporation provides accounting and tax services to individuals, corporations, LLCs and business entities. The Firm has a niche in defending taxpayers audited by the IRS and other governmental agencies. The firm celebrates its 38th anniversary in 2015.
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Victor Santos Sy graduated Cum Laude from UE with a BBA and from Indiana State University with an MBA. Vic worked with SyCip, Gorres, Velayo (SGV – Andersen Consulting) and Ernst & Young before establishing Sy Accountancy Corporation in 704 Mira Monte Place, Pasadena, CA 91101. He has 50 years of experience in accounting, consulting, and tax work.
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The Firm proudly welcomes Arlene Al-os in 2015. She obtained her bachelors of Science in Accountancy from Mindanao State University and MBA from Ateneo de Manila University. She teaches intermediate accounting at UCLA and was a professor of Economics at Asia Pacific College. She has over 15 years of experience including member firms of KPMG and BDO Seidman accounting firms.
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Our readers may call (626) 744-0200 or email tax questions to [email protected]. Please visit our website for about 300 tax tips at www.victorsycpa.com.
