insurance

Big Game Changer

3636701Time marches on whether we plan for it or not, and we only have a few business days left in this year!

What will be the BIG GAME CHANGER for this upcoming tax season? For EVERY taxpayer, for every tax return preparer, you will need to have the answer to this question:

“Did you have minimum essential health insurance for at least one day in EVERY month of 2014?”

If you did have health insurance for yourself, good for you. “Did you have the minimum essential health insurance coverage for everyone in your family?” Tax return preparers will also need to know how much income your dependents earned. Why? Because household income plays a part in calculating your  possible penalty for NOT having insurance. Before you panic, there are exceptions. If you are my tax client, I will be looking at every angle of this issue for you.

Did you know that the Affordable Care Act, commonly known as “Obamacare”, requires that every one of us are covered by minimum essential health insurance? Did you know that if you do not have this coverage, you may have to pay a penalty on your tax return?

Coverage can be a combination of  Medicare Part A, Medicaid (ACCHS in Arizona), Military Health Insurance  (Tricare)  an employer sponsored  plan. or insurance you buy on your own. These all help to meet the “Shared Responsibility” part of the plan.

If you do not have healthcare coverage for the entire year, you could be assessed a penalty. The penalty calculation formula is complicated. If I say there is a minimum penalty, will you realize that is the LOWEST it can be and that it is likely to be even higher?  The lowest possible 2014 penalty for a single person is $95. The penalty for a married couple starts at $190. As the size of the family grows, the penalty grows. And it gets bigger every year. If you do not have the essential coverage for 2015, you could face a larger penalty.

This shows up on your income tax return because the IRS has been charged with the responsibility, to make sure we are paying our fair share. Not only must we pay our fair share of income tax. We must also pay our fair share of healthcare insurance premiums.

I am not a healthcare insurance provider. I am a tax return preparer. If you get your health insurance through “The Marketplace”, the insurance exchange agents will want to see your tax returns to determine how much premium assistance, or discount, you might qualify for.

Tax return preparation will take more time this year. It may cost you more this year in more ways than one. In this business, one thing we can all count on every year is that the law is ever-changing.

In spite of this tax news and gloom, I wish you all a Merry Christmas and Happy New Year!

Obamacare, Affordable Care Act

ID-10096067If you got your health care coverage, health insurance, from the Health Insurance Marketplace, you may need to report changes in your personal situation.

Changes you should report include birth or adoption, marriage or divorce, moving to another address, changes in household income, incarceration or release from incarceration, gaining or losing heath care coverage eligibility and other changes (including becoming a citizen or a change in immigration status or tribal status) that may affect you income and household size

This list looks simple, but life is complex and there are many components to each category. In most cases the special enrollment period for Marketplace coverage is open for 60 days from the date of the event. Go online to HealthCare.gov or phone them at 1-800-318-2596.

With a life change, such as becoming pregnant or getting a new job, you may be eligible for Medicaid or CHIP, Children’s Health Insurance Program.

Key dates for the Health Insurance Marketplace

Are you ready for the next Health Insurance Marketplace Open Enrollment Period? Open Enrollment is the time when you can apply for a new Marketplace plan, keep your current plan, or pick a new one.

4 key dates you should know:

  • November 15, 2014  Open Enrollment begins. Apply for, keep, or change your coverage.
  • December 15, 2014  Enroll by the 15th if you want new coverage that begins on January 1, 2015. If your plan is changing or you want to change plans, enroll by the 15th to avoid a lapse in coverage.
  • December 31, 2014  Coverage ends for 2014 plans. Coverage for 2015 plans can start as soon as January 1st.
  • February 15, 2015  This is the last day you can apply for 2015 coverage before the end of Open Enrollment.

To buy Marketplace insurance outside of Open Enrollment, you must qualify for a Special Enrollment Period due to a qualifying life event like marriage, birth or adoption of a child, or loss of other health coverage.

I am not your insurance sales rep, I am your tax advisor. On the 2014 tax returns to be filed In tax season 2015, one of the questions on the tax return will be, “Did you have minimum health insurance coverage for every month of the year in 2014?” And if you did not have health insurance coverage, do you qualify for an exception? Will you be flirting with a tax penalty for not sharing your responsibility for required health care coverage?

If you are like me, you try to stay healthy and practice wellness, but we still have insurance – just in case. And now we have insurance because it is required. And no, we don’t wake up in the morning saying, “Gee, I haven’t used this insurance for a long time. Let me get my money’s worth and have an accident today.” NO! Buying this insurance is just one of the costs of living in this great country of ours.

Did you know that the NEW HealthCare Law (ObamaCare) can affect your taxes?

ID-100231194What does this really mean for you?

This is such a BIG topic and it’s not possible to answer every question here.  I’m not your insurance specialist, I am your Income Tax Audit Specialist. Here is the introduction to this new tax wrinkle that may impact your current and future tax returns.

The healthcare coverage you currently carry for yourself and your family may be all you need. If you have what is called Minimum Essential Coverage, you probably don’t have to do anything.

But if you go without coverage for any part of the year, there are special rules that apply.  If you don’t qualify for an exemption, you may need to make a special payment called an Individual Shared Responsibility Payment.

Who qualifies for an exemption?  Those who…

  1. Do not have to file a tax return
  2. Do not have access to affordable health care
  3. Are a member of certain exempt groups
  4. Are suffering a hardship.
  5. Have other situations as shown at www.IRS.gov/aca

If you and your dependents do not have coverage and do not qualify for an exemption, then you may have to make a “shared responsibility” payment when you file your tax return.

This payment is either a percentage of your income or a flat dollar amount, whichever is greater. The payment is based on the number of months you go without coverage, or the number of months you are exempt.

If you get your health insurance coverage through the Health Insurance Marketplace, you may be eligible for the Premium Tax Credit. This can help people with moderate income more easily afford the coverage.

If you meet the following requirements, there is a Premium Tax Credit:

  1. Your income must be within certain limits
  2. You must not be eligible for other coverage through an employer or government plan
  3. You cannot be claimed as a dependent on someone else’s return
  4. You cannot file your tax return using the Married Filing Separate status

When you apply for coverage through the Marketplace, you can choose to get the credit now or you can choose to get the credit later. If you choose to get the credit now, you are asking the marketplace to pay some, or pay all of the estimated credit in advance, directly to your insurance company. That will help lower your out of pocket premium costs. If you choose to get the credit later, you take that credit on your income tax return.

If you choose the advance payment, to get the credit now, be sure to report changes in your income or changes in your family size. Report these changes when they happen to ensure you are getting the correct amount of advance credit. This is important, because getting too much or getting too little credit can affect your income tax return refund or balance due.

I still get my insurance from a private insurance company. There is a lot to learn about ObamaCare and income taxes. In next week’s article, I will address the time line for getting coverage now for next year.

Got Insurance

ID-100144061What kind of insurance do you have?  Do you have enough?  Do you have too much? Is it tax deductible?

Let’s begin with…What is insurance? According to Merriam-Webster, insurance is “an agreement in which a person makes regular payments to a company and the company promises to pay money if the person is injured or dies or to pay money equal to the value of something (such as a house or car) if it is damaged, lost, or stolen.”

Here in Arizona we have blistering heat in the southern parts of our state.  We have freezing cold in the northern parts of our state. We have had little earthquake tremors as well as devastating fires. We have had some tremendous wind storms and most recently so much rain that we had serious flooding issues.

There are many type of insurance:

  • Life
  • Property
  • Mortgage
  • Auto
  • Road-side assistance
  • Health/Dental
  • Medicare
  • Long-term care
  • Travel insurance
  • Amusement location or Event insurance
  • Business
  • Worker’s compensation
  • Disability
  • Third Party insurance
  • Key-man insurance

Can you think of any others?

Do you have insurance to cover your losses? What does your policy cover? What are the limits of coverage. Do you have a deductible that needs to be met before the policy will pay you? If you do receive proceeds from your policy, must they be included in your income?

Just because you have insurance to help you cushion your loss, does not mean you will be successful when filing your claim. Just because you choose to purchase insurance does not mean it is deductible on your tax return.

Do you itemize your deductions? You may be able to deduct your medical, dental and long term care insurance premiums. But they are not 100% deductible. And if your policy pays you a daily amount for being the hospital, or for loss of limb or body part, that premium is not deductible.

Are you insuring items used in your business? Generally the business or business owner may be able to deduct the premiums paid. But what kind of insurance is it? What is being insured?

If you are an employee, you may want to insure the tools you own and use in your work. You must itemize deductions in order to deduct your policy premiums, and then they are not 100% deductible.

If you use your vehicle in your work, and you keep your log of business miles driven, you have a choice. You may choose to deduct the business percentage of your actual expenses, which may include vehicle insurance, or you may choose to take the cents-per-mile method of deduction.

There are always more questions than can be answered in any article. You have particular circumstances. You need an answer based on your situation. If you want to talk about your individual question, email me, You can’t buy your answer, but you can schedule a consultation with me. Nellie@BulletProofYourTaxes.com

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