by Justin Ash
The Affordable Care Act has implemented some major changes to the tax code. That said, many of the procedural idiosyncrasies of the Act are still being ironed out. Some of the most common pitfalls are presented below.
If you purchase your health insurance through the NYS Marketplace then you are likely receiving an advance premium tax credit (a discount on your insurance bill every month). At the end of the year you are required to reconcile your estimated advance premium tax credit with your actual income for the year on your tax return. If your income is higher than estimated your credit calculated on your tax return may be smaller than the advanced premiums you received resulting in a balance due.
Updating your information on the New York Marketplace website such as changes in family size, income level, and employment status can significantly reduce this mismatch and lessen the tax bite. In some circumstances it can even make the coverage more affordable.It is important to remember that the penalties for not maintaining health insurance are doubling for the upcoming tax filing season (they will double again next year.) The enrollment period to obtain health coverage for 2016 on the New York exchange expires on December 15, 2015. A special enrollment period applies if you lost your coverage due to a major life event like losing a job that had coverage, birth of a child, divorce, etc . . . .
The IRS has stated recently that many of the returns filed in 2014 included penalties for not maintaining health coverage all year. They have gone on to state that a large portion of those penalties were not valid and that the taxpayer paid them simply because they did not understand the rules. The IRS has promised to implement a program to refund those penalties.The health insurance mandate is relatively new and in most cases requires professional help to navigate. If you are unsure if you will be subject to a penalty or if you qualify for less expensive coverage in the New York Marketplace, please contact our office. We can also analyze your prior year return to determine if you paid a penalty erroneously and get it back for you.