IRS published information pertaining the ACA provisions (ObamaCare)!

There’s a lot of (mis)information floating around about the tax effects of the Affordable Care Act (AKA ObamaCare). Finally, there’s some reliable information on the IRS site that can help us understand the tax-related provisions of the law.

You fan find it all on this page of the IRS web site (click).

Please consult with your tax adviser/accountant (EA or CPA) on any tax-related issue. This article is for general information only, and is not a competent tax advice.

I took the liberty of summarizing the most interesting parts (at least in my humble opinion):

1. If you don’t need to file tax return for any other reason – you don’t need to file it solely for the future ACA purposes. This is important for many low-income taxpayers.

2. Employers are required to report the cost of your health insurance premiums on your W2 (with code DD). That has started last year, in fact, but just to make sure everyone is on the same page – these amounts are **not** taxable. They’re reported for informational purposes only, and I’m guessing the IRS needs that information to correctly assess the thresholds for “limousine” plans.

3. Itemizing medical expenses is now not as simple as it was (not that it was…). If in prior years the AGI threshold (the minimum amount of expenses before you can start deducting) was 7.5% of your total AGI – now its 10%. The good part is that if you get an ACA insurance, you’re likely not to reach even the 7.5% AGI threshold.

4. Tax “penalty” for not having insurance will only be assessed starting of the tax year 2014, i.e.: on the tax returns you file in 2015. Similarly, credits for insurance purchased on the ACA exchanges will also begin as of tax year 2014, i.e.: the tax returns you file in 2015.

For business owners:

1. If you have less than 25 full time employees, you may be eligible for a credit.

2. If you have 50 or less full time employees, you may be eligible for participation in the “Small Business Health Options Program” (SHOP).

3. If you have 50 or more full time employees, you’ll need to file a return describing if and which health insurance you’re providing your employees with.

More details are on the IRS ACA Provisions Page and on the ACA HealthCare.ORG page.

Your Little Advisor

(NOT a tax adviser!)

This entry was posted in News and Politics, Taxes - General and tagged , , , . Bookmark the permalink.

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