The Affordable Care Act & 2017 Taxes

NOTE: I am not a Certified Public Accountant nor is anything in this article meant to be tax advice. I am merely stating facts here.

• If you are a US citizen or a non-US citizen living in the US you must have qualifying health coverage, qualify for an exemption, or make a payment when you file your taxes.
• Under the recently enacted Tax Cuts and Jobs Act, you must report whether you had coverage, qualified for an exemption, or make the individual responsibility payment for both tax years 2017 and 2018. The 2019 tax season is the first where you will not have to report on health coverage.
• 2017 is the first tax year that silent forms will not be processed by the IRS. (The IRS will not consider a return complete and accurate if you do not fill out line 61 on Form 1040).
• If you have coverage for part of the year, the fee is 1/12 of the annual amount for each month you (or your tax dependents) don't have coverage. Coverage for one day during a month qualifies as coverage for the entire month. 
• If you didn’t have health coverage for only 1 or 2 consecutive months of the year, you may not have to pay the fee. Learn more about this exemption.
• If you claim a child as a dependent on your tax return, you’ll be on the hook for the penalty if the child doesn’t have qualifying coverage.
• If the lowest cost Bronze-level Marketplace plan available to you costs more than 8.16% of your annual household income then you qualify for an unaffordable exemption. (This exemption is more common than you might think, i.e., a family of 4, parents age 40 & kids age 10 can make up to $148,529 in 2018 and be exempt).
• Houston folks who's property was damaged by flooding (or any natural disaster), this is an exemption!
• You can use this tool to see if you might qualify for an exemption. The list of possible exemptions is a long one.
• The penalty for 2017 is equal to the greater of the following values:

$695 per uncovered person in household

OR

2.5% of your household income (maxed out at

the price of the avg Bronze marketplace plan)

• So what happens if you don't pay the fee? The IRS will hold back the amount of the fee from any tax refunds. There are no liens, levies, or criminal penalties for failing to pay the fee. The IRS can’t send you to jail for not paying the health care penalty, that has always been a myth. The IRS may offset your income tax refund to collect the penalty, but that’s about it. Unlike other situations where the tax agency can garnish wages or file liens to collect unpaid taxes, the health law prohibits these actions in cases where people don’t pay the penalty for not having insurance.

Again, please consult your CPA for tax advice, but feel free to reach out with questions: [email protected]

Make it a great day or not, the choice is yours!

-Ryan Rundle 02/27/18