Tax season can be a stressful time and many of us absolutely dread that April 15 deadline.
As tax day approaches, the IRS will implement the mandate in the Affordable Care Act (ACA) for the first time ever. This is a law people love to debate over but regardless of your feelings, its going to affect your taxes.
For example, if you don’t have health insurance you could owe a tax penalty up to 1 percent of household income! Not sure what to be worried about or if you need to be worried at all?
Tax expert Kathy Pickering has advice for all your last minute tax questions!
Pickering says the ACA affects taxpayers in three different ways:
- For the majority of taxpayers who have insurance through their employer, all they need to do is check the box that says they have insurance for themselves and their family.
- Those who got their insurance through the marketplace will need to provide additional information and then reconcile the premium tax credit.
- Those who didn’t have insurance could be facing a possible penalty of either $95 or 1 percent of household income, whichever is higher.
"But the good news is that there are many types of exemptions that can help reduce or even eliminate that penalty," she says. For people that don’t have health insurance, there’s a special enrollment period now until the end of April for that last chance to get enrolled in healthcare.
"Take advantage of it now since the penalty fee will go up significantly next year,” says Pickering.
Changes in your life can impact your taxes like having a baby, going to school or buying a house. The Earned Income tax credit is for low-income families but 1 in 5 people eligible for it fail to claim it! The American Opportunity tax credit is another credit for the first four years of college.
Pickering says that if you don’t think you can afford to pay taxes, you can file an extension but don’t ignore paying what you owe and pay as much as you can by April 15. Then set up a payment plan with the IRS.
Have more questions about your taxes this year? Head to H&R Block.