By Mike Scott
“We need to point out to the public that ACA has got major issues with tax preparers,” Bill Dunning, of Clark County Tax Service said.
Dunning and Karen Arnold, of Arnold Accounting sat down with The Media this week to discuss the changes to your tax filing required by the Affordable Care Act, often known as Obamacare.
Beginning in 2014, most taxpayers are required to have health insurance, whether through their employer, Medicare or Medicaid, or purchased on their own through an insurance company of a government-sponsored exchange.
“This will be my 45th year of doing taxes, and this will be the most complicated because the government is us preparers as part of their staff, Dunning said.
“I feel like they’ve changed our role,” added Arnold. “I feel like we’ve gone over to the health insurance department as the police of health insurance, as opposed to being tax preparers.”
In fact, tax preparers face a penalty of $500 per return for failing to verify if all individuals have health care insurance.
“First of all, I’m going to ask them if they’re insured,” Dunning said. “And they’re going to sign-off on a statement saying they are insured, and they are going to have to present their health cards,” Dunning said.
Some taxpayers may receive a 1095A form from their employer or insurance company this year, which will also verify the coverage. Others will not, because the form is not mandatory for this year.
“I’m afraid people aren’t going to realize what they getting in the mail-that’s it’s part of their tax return” Arnold said.
As stated before, most people are required by ACA to have health coverage. A few exemptions exist, but according to Arnold, won’t apply to many in Clark County.
The following is a partial list of exemptions:
● Unaffordable coverage – The amount the taxpayer would have paid for the lowest cost employer-sponsored coverage available or for coverage through the Marketplace is more than eight percent of the taxpayer’shousehold income for the year.
● Short coverage gap – The taxpayer went without coverage for less than three consecutive months during the year.
● Household income below the return filing threshold – The taxpayer’s household income is below the taxpayer’s minimum threshold for filing a tax return.
● Certain noncitizens – The taxpayer was neither a U.S. citizen, U.S. national, nor an alien lawfully present in
● Members of a health care sharing ministry –
The taxpayer was a member of a health care sharing ministry, which is a tax-exempt organization whose members share a common set of ethical or religious beliefs and have shared medical expenses in accordance with those beliefs continuously since at least December 31, 1999.
● Members of Indian tribes – The taxpayer was a member of a federally-recognized Indian tribe, including an Alaska Native Claims Settlement Act (ANCSA) Corporation Shareholder (regional or village), or is otherwise eligible for services through an Indian health care provider or the Indian Health Service.
● Incarceration – The taxpayer was in a jail, prison, or similar penal institution or correctional facility after the disposition of charges.
● Members of certain religious sects – The taxpayer was a member of a religious sect that has been in existence since December 31, 1950, and is recognized by the Social Security Administration as conscientiously opposed to accepting any insurance benefits, including Medicare and social security.
There are also exemptions for certain hardships. In general, an event or condition that prevents an individual from
obtaining minimum essential coverage, such as:
● The taxpayer is ineligible for Medicaid solely because the state in which the individual resides does not participate in the Medicaid expansion under the Affordable Care Act.
Those failing to prove they have insurance will have to pay a penalty, know as the Shared Responsibility Payment. For 2014, the annual SRP amount is the greater of
●1 % of the household income that is above the tax return filing threshold for the taxpayer’s filing status, or
● The family’s flat dollar amount, which is $95 per adult and $47.50 per child (under age 18), limited to a family maximum of $285.
Those penalties are slated to more than double next year, to $225 per adult or 2% of the household income above the threshold
“The penalty is the greater of the two, os if you make $30,000, the penalty will be $300, not $95.
“For the third year, it’s supposed to equal whatever the cost of a silver-plan insurance policy is,” added Arnold. “So eventually, it’s get policy or pay the equivalent of the policy in a fine.”
“The other point is, if you have a refund coming, they can penalize you and take the money out,” Dunning said. “If you owe money, then the penalty does not apply.” However, the IRS has 10 year forward to collect that money owned in the future.”
Both Dunning and Arnold suggest people contact their tax preparer as soon as possible, because the process is going to take longer this year because of the new requirements.
Click the audio player below to hear our entire interview with Bill Dunning and Karen Arnold, or click the link to download IRS Pub 5187.
Click Here For IRS Pub 5187