Affordable Care Act tax penalties may not be a problem for some people
Some people without health insurance in the United States may not be subject to tax penalties next year. According to the Affordable Care Act, all U.S. citizens must have a certain level of health insurance coverage. If people do not have the adequate level of coverage, they could be subject to fines from the federal government, issued during tax season. Some people may qualify for an exemption from these fines, however, due to provisions of the federal law.
Consumers can apply for approximately 30 tax exemptions based on their insurance status and income
According to Robert Mertes with H&R Block, there are 30 exemptions that people can apply for that could help them avoid tax penalties. These exemptions fall under two categories, with the first being associated with how much income they make. Those whose income is so low that they are exempt from filing taxes can avoid the federal penalty associated with the lack of insurance coverage. There are other exemptions that some people may qualify for, as well, but many people may not be aware that these exemptions exist.
Majority of consumers are unaware of the tax penalty they may face
According to a recent survey conducted by Harris Poll, a large portion of consumers are not aware that they need to report their health insurance status when filing their 2014 taxes. Approximately 56% of consumers do not know about tax penalty exemptions, while another 45% were unaware of tax credits that could help make health insurance coverage provided through an exchange less expensive.
Deadline to file for tax exemption has passed
The survey also found that 62% of consumers were unaware that there was a tax penalty associated with not having any insurance coverage. The vast majority of the survey’s respondents also did not know that the deadline for applying for an exemption from this tax penalty has already passed for 2014. As such, some people may be hit with the tax penalty because they do not have insurance coverage or if they fail to report their insurance status on their tax filings.