Six Million To Pay ACA Penalty in 2014
As many as 6 million taxpayers will have to pay a penalty of as much as 1 percent of income because they went without health insurance in part or all of 2014, the Treasury Department said.
The penalty, part of the Affordable Care Act, is designed to encourage people to sign up for health insurance under the law. The penalty would apply to about 2 percent to 4 percent of all taxpayers for 2014.
Tax filing for 2014 opened Jan. 20, and the Internal Revenue Service's Form 1040 -- for federal income tax -- includes a new Line 61 asking if the taxpayer has health insurance. Three-quarters of taxpayers won't have to do anything more than check that box. The remainder will have to take additional steps, though most won't pay a penalty in 2014 according to the IRS.
The IRS has been preparing for additional strain during the tax season as people adjust to the rule, warning that about half the people who call its toll-free phone lines won't be able to get through.
About 3 percent to 5 percent of taxpayers got tax credits last year to help them pay the cost of higher premiums on insurance plans. Ten percent to 20 percent weren't insured for all or part of the year but will be able to claim an exemption. People who owe a penalty will pay a fee because they chose not to obtain health insurance, and they're not eligible for one of the exemptions.
About 8 million people purchased health care policies through the insurance exchanges in 2014. However, a large number did not maintain coverage for the full 12 months and may still owe a penalty. The United States gets about 150 million income tax returns a year.
The Health Care Law's Effect on Your Tax Return
The Affordable Care Act contains tax provisions that affect the 2014 income tax return. Almost everyone is affected by the individual shared responsibility provision while only people who purchased coverage through the Marketplace (HHS.gov) are affected by the premium tax credit. The following chart will help you better understand what you need to do on your tax return.
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