There are many things that taxpayers need to know about the affordable care act and how it can affect your tax return and possibly take cash away from you.
The following are three important points that you need to be aware of if you are purchasing health insurance thought the market place
- If your income is below a certain level, you may be eligible for the &ldquot;Advanced Payments of the Premium Tax Credit&rdquot;. You have an option of receiving a credit that gets paid directly to the insurance company, which will reduce your monthly premium. You can also elect not to take the credit now, but get it as a &ldquot;refundable&rdquot; credit on your tax return (see below). This credit is based on your income for the prior year and what you expect it to be for the current year.
- If you do apply for and receive the Advanced Premium Tax Credit, you will have to file a tax return, even if your income is below the minimum required amount to file. You will have to reconcile the income you reported to the market place and compare it to your actual return. If you have more income than you reported to the marketplace, you will have to pay some of the credit back. If you had less, you can back some credit.
- If you do not have insurance for you AND all members of your household (whether or not they are dependents), there is a penalty for each month that you do not have insurance. The penalty is 240% higher than it was in 2014 and will almost double again in 2016.
There are caps, maximums, exceptions and exemptions to all of these rules.