In 2010, when Congress passed the Affordable Care Act (commonly called Obamacare), the effects seemed far away to many of us. For 2014, there will be several direct effects upon every American, with the requirement that all Americans of all ages obtain qualified health insurance for the entire year. The requirement to obtain health insurance applies to you individually as well as to anyone you claim as a dependent on your return.
If you have purchased insurance via the Health Insurance Marketplace, a 1095-A will be sent to you by January 31, 2015. If you do not receive the 1094-A, you will need to contact the Marketplace to request the document. The 1095-A will document your coverage by month, premiums and any advance payments of the tax credit. We will need all copies of the 1095-A that you receive in order to complete your tax return.
For those taxpayers who have coverage via an insurance company, their employer, Medicare or Medicaid, the 1095-B and C will not be required until 2015 although may be issued. We will therefore need to obtain from you the following information in order to complete your return:
1. Health insurer(s) for the year;
2. Number of months of coverage;
4. Members of your family covered by the above health insurance throughout the year;
5. Your county of residence all year;
6. Completion of the Health Insurance page and questions related to health insurance in your 2014 Tax Organizer will be mandatory.
Of equal importance for 2014 are the multiple possibilities of tax mistakes made primarily by your dependent children who may work in 2014. The simplest guidance we can provide you to avoid this mistake is: Do not allow any dependent children to file their own return, particularly college students, and do not file them yourself. Although this guidance appears self-serving for us, let us assure you this guidance is meant to protect you from your children inadvertently costing you literally thousands of dollars in potential health care tax credits. The IRS recently released new Form 8962 to calculate the credit and in our continuing education classes we have learned how difficult it is to calculate the credit and how easy it is to make a mistake and lose the credit. We are estimating this new form will require substantially more preparation time for this year’s return. By now you have seen our letter regarding our Monthly Maintenance fees beginning 11/1/14. The $19 per month additional fee detailed in that letter covers the time involved with Form 8962. We are sorry about the fee increase but this is one of the costs of compliance with these new requirements. If you have not already booked your tax planning appointment for 2015, please do so ASAP by using our website to book a 1 hour appointment – put “Tax Plan” in the notes section for the appointment. It is thru this plan that we will find ways to lower your taxes to offset the increasing costs these new laws and requirements are causing for all of us.
For those of you who have received an advance payment of the Health Care credit by purchasing insurance through the Exchange we also need to warn you in advance that if you received a greater credit than allowed you will be forced to repay the excess with this year’s return.
We also encourage you to visit www.Healthcare.gov when you have a chance just to see what is available to you in the form of insurance, and what premiums will really cost for your family so that you have a clear idea of the facts without a political or media based bias.
The other aspects of the Affordable Care Act that no one is talking about are the two new surtaxes. Many people incorrectly believe that only high income Americans pay these surtaxes, but because the tax is not adjusted for inflation, within a few years all Americans will pay the additional surtaxes. You need to take steps now to plan for this event and our advice is to utilize every fringe benefit your employer offers, maximize 401-k deferrals and call us if you are expecting a big bonus, stock or asset sale or other major income change so that we can work with you to minimize the effects of these new taxes.
*A special note for our clients that are employers. Under these new regulations, it is not permissible to reimburse employees for medical insurance premiums. The penalty for this infraction is $100 per day per employee. However, this rule is still evolving, so if this is a benefit you are considering, please contact our payroll specialists.
As usual we thank you for your business in the past, and look forward to working together for many years.
Shauna Wekherlien, your Tax Goddess