Thanks to the Affordable Care Act, many taxpayers will be surprised to discover they either owe a lot more to the I.R.S. or their refund is much smaller than expected. Kathy Pickering of the Tax Institute at H & R Block tells us many Americans are going to be really surprised, and it’s not a good surprise especially for those forced to pay a penalty for not having health insurance. In my interview with Pickering, she said “People thought that penalty was only going to be $95. In reality, it’s either $95 or one percent of household income or whichever is higher. So, for example, you’ve got a family of four and they’re getting $60,000 a year, their penalty could be $400, which is quite a lot more than the $95 that they might have been expecting.”
Pickering went on to describe the impact of the Affordable Care Act, which is also known as Obamacare. “Three different ways that people are going to see these impacts are, for the vast majority of taxpayers who’ve got insurance – either employer or they got their own insurance – they’re going to check the box that says ‘Yes, I’ve got insurance.’ The second impact is for those who got insurance through the marketplace: they’re going to have to provide a little bit of additional information and reconcile their premium tax credit. And then the third impact is for those who didn’t have insurance: they may be facing a possible penalty.”
But Pickering has some good news for taxpayers that may qualify for an exemption. “There are some exemptions available,” she said, “to help people with that penalty. There are more than 30 different kinds of exemptions that can either reduce or eliminate the penalty. And H&R Block has the professionals trained in ACA to help people navigate their way through these complexities.”
According to a Washington Times report, only 43 percent of taxpayer phone calls are being answered at the I.R.S. with its 87,000 employees. So it is up to the taxpayer to report all life changes since their last return. Pickering said “Life changes means tax return opportunities. And that’s for things like getting married, having a baby, buying a house. All of those things can have an impact on your tax situation and often-times in a positive way. For example, the earned income tax credit which is for low-income working families: the IRS reports that one in five families who are eligible for this credit forget to claim it.”
The Tax Institute at H & R Block recommends that even if those with a tendency to procrastinate should file before Wednesday, April 15th.
Owing money to the I.R.S. can be intimidating. Said Pickering, “If you owe money, you’re going to want to estimate how much you owe and make as much of a payment on April 15th as you can. And even if you can’t afford to pay anything, file your taxes and you can set up a payment plan with the IRS for the amount that you owe.” With regard to tax refunds, Pickering said “On average, the refund is $2,700 to $2,800. So you want to make sure that you’re getting all the money you are due.” For more information from the Tax Institute at H & R Block, see: HRBlock.com
Spero contributor John Clemens is a veteran broadcaster of four decades who also reports for USA Headline News.