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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.
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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.

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healthYears ago the expense of weight loss programs and stop-smoking programs were not deductible. The negative effects of smoking and being overweight were not seen as illnesses but as bad habits. Then someone in Congress realized these former bad habits lead to real health problems. Somebody must have convinced a lawmaker that we could have more productivity if people stopped smoking and made better dietary choices. Who knows. But that kind of influence is what gets laws changed and the tax laws are what we have to follow when we file our tax returns. We can deduct medical expenses after we become sick. We can deduct the cost of repairing the damage. But preventive care is not deductible. We cannot deduct the cost of our gym membership or workout equipment. The tax laws were changed to allow us to deduct expenses for programs to help end the smoking habit. When obesity became thought of as an illness, we could then deduct the cost of programs to help combat that epidemic. I promised a few weeks ago that I would tell you how I quit smoking. One of my clients said, “You smoked?!” It was many, many years ago that I did smoke. This article is more about habits than taxes, but if it can help you quit, then I will save you a lot of money, you might live longer and get to pay taxes longer. How can the IRS argue with that? Smoking was considered “cool” when I was growing up. Famous movie stars were seen holding cigarettes and blowing smoke rings. I was a teenager and I wanted to be cool like that. I can remember how awful it tasted and how awful it felt to force that stinky smoke into my lungs. I learned how to ignore the negative aspects. My hands smelled bad and an occasional spark would burn a hole in my clothing or the furniture. So I grew up smoking and then smoking became less popular. People were complaining because non-smokers didn’t want to breathe second-hand smoke.  Magazines were now carrying articles and photographs about the horrors of cancers from smoking.  Now it was becoming more important to me NOT to smoke. I didn’t want to disfigure my face from cancer of the mouth. I didn’t want to talk through a tube in my throat.  But it was not easy to stop this habit that can have such an addictive hold. I stopped several times before I learned how to quit. I read a book that said it takes only 5 days to get the chemicals from smoking out of your blood stream.  I repeated that to myself every time I thought I wanted to light a cigarette. I told myself just wait 10 minutes. If you still want to smoke then, you can. After an hour went by I realized that I had gone much longer than 10 minutes. After the first day I knew I only had four more days to go. And on day three I couldn’t start back up because I only had two more days to go. I told myself I was bigger than that little stick of tobacco.  On day six, I knew I had the chemicals out of my blood stream, but I still wanted to smoke. I realized I needed a new habit. I had to change my behavior and learn to do something else with my hands. I held a ball point pen as if it were a cigarette, then I would take a long, deep inhale as if I were taking a drag on the cigarette. Pretty soon I had that bad habit, that nicotine addiction licked. If you want to lick something, maybe this will give you the support you need to find what will help you be successful.  I quit smoking “cold turkey”. Quitting food is quite another story. I haven’t got a magic answer for that one yet. I like the way food tastes and I need to change my thinking and my behavior. So this article is not really about tax deductions or tax credits, it is about your good health. I’d rather see that for you than than a medical deduction.
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ID-100152039Is the Internal Revenue Service closed for business? Could this be the sign you see when you try to reach a federal government office this week? Yes, a Federal Shut Down began October 1, 2013. This is the same day the Patient Protection and Affordable Care Act, or “Obamacare” was to begin. This is also the first day of the United States’ Fiscal Year. Most of us work on a calendar year basis, January 1 through December 31. The government’s fiscal year begins October 1 and runs through September 30 of the following year. When I worked for the IRS in 1979, we experienced a government shutdown. Like today, our government leaders were at odds and could not agree on our laws. How would our government move forward? During that shutdown, only certain “essential” employees were expected to still come to work. Was I one of those essential employees? We were told to go home at lunch and listen to the newscasts. I had one afternoon to wonder… was that a day to party?  NO, it was a day to worry.  Would I have to get up early the next day or could I sleep in? Like today, I traded my time for dollars and I needed those dollars to pay my bills. I was an auditor. I went to work the next day. My co-workers were temporarily furloughed without pay. There is so much affected when the government shuts down. Some services, like national parks and museums, will completely shut down. Some offices will be cut back and others, like public safety, air traffic controllers will have business as usual. The Post Office gets its money from the sale of stamps so fortunately we will still have mail service. Where does the IRS fit into all of this?  Well, don’t call the IRS with a question. Customer Service is closed. Audits, already started, will be suspended and for now, no new audits will begin. Don’t worry though, your tax payment will always be accepted and the filing of your tax returns will continue. If you filed an extension for your tax return, the extended due date for your 1040 return is still October 15th and if you don’t file by that date, well – it is just plain late. What does the IRS have to do with Obamacare?  Did you know that the IRS is charged with the responsibility of seeing that every American taxpayer proves they have medical insurance? Yes, so that means there will be a new form for me to include with your tax return. Beginning January 2014, taxpayers who choose not to have medical insurance will pay a fine and they will be subject to a penalty imposed on your income tax return. This penalty will be the greater of $95 per person each year, OR 1% of the household income. People who are temporarily unemployed, people who are on Medicaid (not medicare) or people who live in a state that has opted out of the new expanded program, such as Texas, Pennsylvania or Wisconsin, will be exempt from the penalty. Is this one of the laws that our Congress is battling over? Yes!  Is Obamacare still going to be mandated? We don’t know only time will tell. One thing is certain. We need to know what might be ahead so we can plan. Plans can change. Ignorance is expensive. If you are not aware, you are at risk of paying more than you expected.
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