Wondering how the health insurance laws will affect your 2014 individual income tax return? Here are two new items you may need to include on this year’s Form 1040.
- Penalty for not having health insurance. You may owe a penalty if you were uninsured for more than three months during 2014 or if you had health insurance that failed to meet minimum requirements. For your 2014 return, the penalty, also called the shared responsibility payment, is calculated either as a percentage of your household income or as a flat fee of up to $285 per family.
If you qualify for an exemption from the penalty, you’ll need to file Form 8965 indicating what exemption applies. For 2014, exemptions include unaffordable coverage, a short gap in coverage, and various hardships such as foreclosure, bankruptcy, or medical expenses that resulted in substantial debt.
In some cases, you will need an application from the government health insurance website to claim an exemption.
- Premium tax credit. Did you purchase health insurance on the government marketplace website? If you meet other requirements such as specific income limits, you may be eligible for the premium tax credit. This federal income tax credit will reduce your tax dollar-for-dollar and could result in a refund.
When you completed your health insurance application, you may have elected to receive the premium tax credit throughout 2014 in the form of reduced premiums. If so, you’ll need to fill out a new tax form (Form 8962) to reconcile the amount you received during the year with the amount you’re eligible to claim.
We’re ready to help you navigate the new rules. Give us a call.