H&R Block provides some insight into why some consumers will have trouble with their tax filings this year
Acclaimed tax preparation company H&R Block has released statistics concerning the impact the Affordable Care Act will have on tax returns. The federal law is meant to make health insurance more accessible and affordable for consumers throughout the country. This is accomplished through the provision of subsidies, which offset the overall cost of health insurance coverage. The problem, however, is that many people will have to repay some of their tax credits.
Consumers expected to repay an average of $530 in tax credits
According to H&R Block, some 52% of consumers that have purchased coverage through exchanges will have to repay an average of $530 of the subsidies they have received from the federal government. This will reduce their potential tax refunds by an average of 17%. For some, this could be particularly challenging, as they may not be expecting to repay anything they have received through the subsidies that are offered through health insurance exchanges.
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Many people will be hit with penalties for being uninsured
This year, those filing taxes will have to check a box that identifies that they are covered by insurance. This will be little trouble for most people, but those that were not insured last year could face penalties from the federal government. H&R Block estimates that the average penalty for those that went without insurance coverage will be $172. According to the Affordable Care Act, the lowest penalty that uninsured consumers will be hit with is $95 per uninsured adult in a particular residence. People can be fined more because federal law allows for fines to be based on a percentage of a household income as well.
Consumers overestimate their income during the open enrollment period
One of the issues that is affecting how much consumers will have to repay is that they overestimated their incomes when filing last year. Many people estimated their 2014 income based on 2012 information, when the open enrollment period first began. When enrolling, consumers are required to provide some financial information, which is used to determine whether or not they qualify for subsides and certain health insurance plans.