Skip to main content

Obamacare Penalty: What You May Owe on Tax Day

CBN

Share This article

The 2014 tax year marks the first time American taxpayers will get a glimpse of how much the Affordable Care Act will cost them.

It starts with some new questions about your healthcare on your tax forms. And one out of every four Americans could face fines if they haven't bought health insurance yet.

According to the IRS, around 75 percent of taxpayers will check a box indicating they have health coverage from their employer or another source.

But for the 25 percent of Americans covered by Obamacare or not covered at all, it won't be quite as simple.

For those who purchased government-backed healthcare and received a tax credit to help pay for it, that credit will have to be reconciled with either taxes owed or a refund.

"People who don't have coverage are going to be paying penalties. People who received coverage through the exchange, and a credit, are going to have to reconcile the credit they received," Richard Gartland, a senior tax advisor with H&R Block, explained.

For American taxpayers who are still uninsured, this year they will be charged a penalty of $95 or 1 percent of their household income, whichever number is higher.

"The average penalty has been coming out at about $177 this year. The most important thing to remember about penalties is they are going up," Gartland said. "They are going up in 2015 by about a factor of two. They're doubling, and they will go up again in 2016."

However, there are about 30 exemptions that can help lower or completely eliminate any penalties. They generally fall into three categories: personal, financial, and medical.

The number one exemption is for people who are not required to file a return for 2014.

"If you are not otherwise required to file a tax return for 2014 then you are not required to have coverage or you're not required to pay the penalty," Gartland said.

If you haven't signed up for healthcare yet and want to avoid the penalty, the federal government has extended the window to register until April 30.

Share This article