If you weren’t insured last year, you may find yourself among the three to six million Americans paying the Obamacare tax penalty. The penalty is $95, “or 1% of income above a certain threshold (roughly $20,000 for a couple). So you could end up owing the IRS a lot of money,” according to Money.CNN.com. For example, if a married couple earns an income of $100,000, they will owe $797. To calculate how much you could potentially owe, there is a Tax Policy Center ACA penalty calculator to input factors, such as age, income and number of dependents. The calculator then estimates your tax penalty.
Americans who remain uninsured in 2015 will be penalized $325 or 2% of their income. For the first time, Americans preparing their tax returns will have to adhere to Obamacare’s mandate. Most taxpayers, about three-quarters, have health insurance through their jobs or government programs and will only have to check a box on the Form 1040. Money.CNN.com reports that “Another 15 to 30 million people will request and be granted an exemption to the mandate by filing Form 8965.” Those who are not accountable to the new requirement are undocumented immigrants, low-income Americans and those whose insurance premiums were more than 8% of their household income.
Between 4.5 and 7.5 million taxpayers received subsidies for insurance premiums upon signing up for Obamacare. They will use Form 8962 to reconcile their actual 2014 income with the figure they estimated in late 2013 to early 2014 when they applied for a policy. Those who underestimated their income will receive smaller tax refunds or owe the IRS money. H&R Block projects that about 3.4 million taxpayers will have to pay back a portion of their premiums.
In the event that people overestimated their 2014 income, they may cash-in a refund for more than they were expecting.