As much of the nation and world has been enjoying this holiday season, my team and I have been preparing for a season of a different kind — TAX season.
And sure, we’ve certainly been pausing to meditate on the beauty of THIS season, but it just so happens to always coincide at the dawn of our busiest time of the year. And this year (2015) is shaping up to be a very “interesting” year.
The Affordable Care Act (“Obamacare” or the “ACA”) has a bunch of health care tax provisions that are kicking in this year, that will definitely affect your tax return.
Enough so that I am today devoting my post to you about its ramifications.
Honestly, I prefer giving quick tax alerts (when they’re necessary) in my introduction space, and then write something bigger picture and more analytical than the “just the facts, ma’am” approach I’m providing you today … but sometimes, well, the facts need to be shared.
So in that vein, PLEASE share this information with your friends and colleagues. There very well may be some ugly surprises for people who are not aware of some of these challenges.
(I will continue to be sharing more about the ACA and its impacts for regular taxpaying families and businesses, so if you are receiving this and are NOT a subscriber to my weekly notes, you can fix that here: http://on.fb.me/1eSk6Er )
What Long Island and Stamford Taxpayers Need To Know About The ACA
“Expect trouble as an inevitable part of life, and when it comes, hold your head high, look it squarely in the eye and say, ‘I will be bigger than you. You cannot defeat me.'” -Ann Landers
First of all, this legislation has continued to be a political firecracker. I am NOT making certifications or predictions about the political, judicial or legislative future of this bill.
My job, as your local Long Island and Stamford tax professional, is not to rail against the establishment nor to prop it up — instead, I am YOUR advocate as you walk through the byzantine process of fulfilling its requirements.
From what I am hearing inside the tax professional world, it seems unlikely that this legislation could ever become “unwound”, and it’s high time that all families and small businesses adjust to the world in which we find ourselves, and prepare for its effects.
Frankly, this upcoming year (2015) will be the first year that ALL taxpayers will feel the effects of the Affordable Care Act. That’s because starting with returns that are due on April 15, 2015 (which cover the year 2014 — the IRS and many others refer to this as “Tax Year 2014” or TY2014) … tax returns are now required to report on health insurance coverage status.
This is whether you enrolled in health insurance (or not), and whether you used an ACA plan through the various state and federal marketplaces — or not. It’s for ALL taxpayers.
(There are some exemptions to this requirement, and those can be found here: http://1.usa.gov/1yUTga0 ).
You are required to show that you have had insurance starting on January 1, 2014 in order to avoid the penalty — and that you were without insurance for less than 3 months during 2014, if you are to avoid penalties.
Future penalties are scheduled to increase, so although for some taxpayers it may seem like a decent tradeoff to just pay the penalty for this year, it becomes increasingly costly to do so in the future.
Second, premium tax credits will be evaluated and adjusted according to information submitted on your tax returns.
This means that if you are 1) currently receiving a tax credit (provided directly to your health insurance provider as payments towards your premium — and offered only to eligible individuals and families without access to employer-sponsored coverage, and who purchase insurance through a marketplace) and 2) your income or household size has changed since you were granted the credit, then your tax refund or obligation may be affected.
So, an important note: if your income or the size of your household HAS changed, it is imperative that my staff and I help you to report this properly on your return. In fact, it may be worth contacting us (http://LongIsland-Accountant.com/contact ) while you still can (whether you are an existing client or not), and letting us know how your income has changed. We may be able to help you prepare, or adjust your income appropriately through our return preparation process, etc. You can also call us: (516) 449-2852 if you think you will need our help.
If you received this premium tax credit, you will be receiving forms 1095 in the mail. KEEP THESE FORMS. You will need them for the tax return process.
Sadly, the issuance of these forms is optional for some entities, so it can be a complicated issue to make sure you have all of them. Which leads me to my last point…
Please, for the love of all that is good and holy, do NOT go it alone this year when preparing your tax returns. I understand that this exhortation may fall on deaf ears to you, as there is clearly a measure of “self-interest” in my saying this to you. But please understand, whether you use MY services or someone else’s — I will be much happier to hear that you had an experienced professional by your side than that you relied upon the notoriously unreliable algorithms of tax softwares. All of the different factors that are coming into play on this year’s tax return are creating a perfect storm for the software companies, and, well … let’s just say that this is probably not the year to “give them a shot.”
Again, self-serving nature of this statement acknowledged and understood.
But I do hope you can tell that most of all, I want your family to thrive and not to have to worry about all of this junk.
That’s what we’re here for. Let us worry about this now, so you don’t have to do so later on.
(516) 449-2852 or (203) 658-5092
To your family’s financial peace over these holidays…
Michael J. Kessler, CPA