When workers signed up for Obamacare, they submitted their estimated annual income to qualify for tax subsidies. But 55% of those American households took home more money than they expected or estimated. Workers who underestimated their income due to more overtime or changing jobs will be hit with a tax bill along with part-time workers and free-lancers who made more income than they estimated.
Americans who had an alteration in family status such as divorce, marriage or death will find a change in their estimated income resulting in a tax bill too.
Americans penalized for not having health insurance are also receiving tax bills. Under Obamacare law, not having the health coverage carries fines of $95. per individual or 1% of an individual’s income for 2014. Each uninsured person is paying an average fine of $172.00 per year.
Taxpayers will have to struggle with new tax forms and calculations as well. Unfortunately, tax preparers often use software to help people with filing their returns and available software is not up to task when figuring the complicated calculations of Obamacare. The software would have to be programmed for the particular area where the taxpayer lives and would have to incorporate details of Obamacare plans for that region of the country. There is no software available to calculate those details. These new tax calculations have to be done without a computer, by a knowledgeable person.
Another wake-up blow to millions of taxpayers will be reduced subsidies leading to individuals paying a larger monthly Obamacare payment.
The IRS may not have a happy year either. The laws connected with Obamacare assigned all penalties and subsidies through to the IRS. The IRS is one agency already struggling with answering phone calls and having the correct input for taxpayers. With these new and major responsibilities associated with Obamacare come new and additional problems for the IRS. Mistakes on the health-related forms already put a hold on 820,000 refunds to taxpayers. The IRS won’t know the amount of all the issues and miscalculations until the end of the filing season.
If you need assistance filing your taxes, or need have any other tax issues, you can visit our Tax Law page or contact our tax attorney at 303-618-2122. For information on our other areas of practice, including Business Law and Real Estate Law, visit our website.