How the Affordable Care Act affects how you file income taxes

KNOXVILLE (WATE) – For thousands of people who signed up for health coverage under the Affordable Care Act last year, tax season could be a headache this year. Some people may be forced to repay subsidies from the health care overhaul, possibly making it confusing for those signed up for Obamacare.

Income tax preparation services have spent extra time over the last few months gearing up for the onslaught of new paperwork that is essential to filing 2014 tax returns. One brand-new piece of paper is the Health Insurance Marketplace Statement, the 1095-A.

Those using the marketplace are unable to file their taxes without it.

Income tax preparation services have spent extra time over the last few months gearing up for the onslaught of new paperwork that is essential to filing 2014 tax returns.
Income tax preparation services have spent extra time over the last few months gearing up for the onslaught of new paperwork that is essential to filing 2014 tax returns.

At H&R Block, tax specialist Evonne Kautz is already answering a lot of questions from tax filers enrolled on the marketplace under the Affordable Care Act about how it may affect their taxes.

“There is a lot of confusion. It’s not exactly clear what they need to bring in to file their tax return, and they’re not sure how it is going to impact the tax return,” said Kautz.

One of the important things to know is the paperwork you need to bring.

Evonne Kautz
Evonne Kautz

“For those who have coverage through their employer, it will just be their W-2. There is a special code there that signifies they do have health insurance coverage through their employer,” Kautz said.

For the first time, taxpayers must address their health insurance status when filing their tax returns.

“If they enrolled in the health care marketplace and purchased insurance through the exchange, they will receive a special form created for this called the 1095-A,” Kautz explained.

Office manager Lisa Adkins demonstrated how that special form will be filled out.

“It’s for anyone who actually enrolled in health care coverage through the marketplace. It tells who the recipients are, who was covered and how many months they were covered and what premiums were paid. And also what premium assistance they received that’s basically a subsidy to help them pay their monthly health insurance premium.”

Many people with questions walking into offices of H&R Block and other tax preparation companies may be in for a surprise if they don’t have health insurance.

“For those who don’t have health care insurance, then we’ll be looking at whether they are eligible for an exemption so that they don’t have a penalty. But if they weren’t eligible for an exemption, they might have a penalty to have to pay,” said Adkins.

Lisa Adkins
Lisa Adkins

Tax preparers are ready to explain that penalties could cut into the amount of money you get back.

“It’s a penalty that can be at least $95 per adult that is claimed on the tax return, up to one percent of taxable income. So it could be a penalty that might reduce your refund,” Adkins said.

Most tax preparers spent months in training, preparing them to tackle one of the biggest tax law changes in decades, the Affordable Care Act.

According to an estimate by H&R Block, as many as half of the nearly seven million Americans who received subsidies on the exchange under the Affordable Care Act may have to refund money to the government.

As a result of changes, many tax preparation companies have added staff to handle the increased number of customers they expect this tax season.

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