Maybe you thought it was unpossible, but ♡bamaCare!!! has made tax season even more funner! Read:
If you did not have qualifying coverage for the entire year, the first task is to determine if you are exempt from the penalty. For that, see the instructions to new IRS Form 8965 Health Coverage Exemptions (and instructions for figuring your shared responsibility payment). If you were exempt for last year, file Form 8965 with your 2014 Form 1040 to prove it. For additional information on exemptions, see IRS Publication 5187, Health Care Law: What’s New for Individuals and Families. Both Form 8965 and Publication 5187 can be accessed at irs.gov.
If you were not exempt, the next step is to calculate the penalty amount that you owe using the worksheet in the instructions to Form 8965. Enter the penalty amount on line 61 of your return. For 2014, the penalty can range from $95 or less to a good deal more for higher-income folks. For plain-English details, see Owe the IRS money? Here’s some good news. Also be aware that the penalty for 2015 and beyond can be much higher than the penalty for last year.
The other Obamacare change for 2014 was the debut of the so-called premium assistance tax credit (PTC in IRS-speak). It is available to eligible individuals and families who obtain health coverage in a qualifying plan by enrolling through a state-run insurance exchange or through the federal exchange (healthcare.gov).
In general, you are eligible for the PTC if your household income was between 100% and 400% of the federal poverty line and you did not have access to affordable employer-sponsored coverage last year. The allowable credit amount can vary widely depending on your specific circumstances. For additional information on the PTC, see IRS Publication 974, Premium Tax Credit.
The PTC can be advanced directly to the insurance company to lower your monthly premiums or it can be claimed when you file your return. You may not know the exact amount of your allowable PTC for last year until you actually file your 2014 Form 1040. Calculate the PTC using new IRS Form 8962, Premium Tax Credit. Taken together, Form 8962 and its instructions add up to a daunting 17 pages.
Dance, tax monkeys, dance!
That this mess was coming is not news to you and me, although the number and density of the bureaucratic details never lose their power to shock. And we can probably enjoy a bitter laugh or two together as we imagine some left-leaning 1099 employee pouring over the myriad new tax forms, only to discover they actually owe the IRS money for their “free” coverage.
But mostly I’m remembering President Obama’s promise that his signature law would create billions in savings by eliminating unnecessary paperwork.
Good times, good times.