Although the Affordable Care Act (also known as the ACA or Obamacare) was signed into effect in 2010, the year 2014 marked the first year that most Americans were required to have health insurance. So, what does this mean to you?
As we approach the end of the year and the beginning of the 2015 tax filing season, it’s important to understand that every American who files a 2014 tax return, including you and me, will be impacted by the initiation of Obamacare this year. You may be impacted in a small way or in a major way – depending on your health insurance status, and where you obtained your health insurance during 2014. But, nonetheless, you will definitely be impacted in some way.
Even if you have never had to file a tax return in the past – you may be required to do so this year, as a result of Obamacare. (*If you received advance healthcare tax credits this year, then you must file a 2014 tax return).
And, if you listen to the experts - both inside and outside of the US Government, we can anticipate mass chaos in regards to this first tax season under Obamacare. The headline on “Newsmax” from December 12th quoted Douglas Holtz-Eakin, who headed the Congressional Budget Office from 2003 – 2005, as saying that the 2015 tax filing season “is going to be a disaster!”
The first major change on 2014 tax returns will be the requirement that you must report your health insurance status when you file this year. For some Americans, maybe you, this will be a simple process. You will receive the necessary form in the mail – similarly as to how you receive your W-2 from your employer right now. When you receive this form you will simply copy the information onto your 1040 return. No big deal, right? Maybe. But, since the employer mandate portion of the ACA was delayed – it won’t actually go into effect until next year – this means that most businesses don’t have to document healthcare coverage to either their employees filing their taxes or the IRS for the tax year 2014. So, there is no guarantee that you will receive the appropriate 1095C form from your employer. Go figure!
If you are one of the estimated 7 million Americans who chose a qualified health plan with premium tax credits, then you will need to file a form #8962 - which is the new “Premium Tax Credit” (PTC) form. You will have to reconcile (using form #8962) that the advance tax credit you received was actually what was due to you. If you are one of the 279,000 households who the government has already identified as having reported incomes that don’t match what they have on record, when they applied for and received the advance healthcare credits – then any discrepancy amount will be deducted from your tax refund if you are entitled to one this year. And, if you did receive tax credits towards healthcare, you will not be permitted to use the 1040-EZ Form to file your taxes for 2014 either.
Or if you are one of the estimated 23 million Americans who qualified for an exemption (there are 19 potential exemptions!) from the shared responsibility provision (also known as the individual mandate) of the Affordable Care Act, then you will have to complete a form #8965. You will have to provide documented proof that your exemption is legitimate. You also will not be permitted to use the 1040-EZ form to file your taxes this year.
Lastly, if you are one of the estimated 4 million Americans who can afford health insurance (according to the governmental standards) but you chose not to buy a plan this year, then you will have to pay a penalty. If you thought maybe perhaps the feds were so caught up in the whole website mess that you could perhaps slip through the cracks and no one would notice that you didn’t get yourself “minimum essential coverage” this year. Well, you can think again! The IRS is ramping up their staff to ferret out those individuals who actually have healthcare coverage and those who don’t; and, furthermore, the penalty for non-compliance with the mandate will be considerably more expensive in 2015.
All total, there are 4 new Tax Forms that have been released in conjunction with the ACA. And, yes, they do come with instructions. But, according to the experts in the field, such as Timothy Jost in his latest article entitled “Implementing Health Reform: Complicated ACA Tax Forms Could Cause Problems”, where he states “It is difficult to overstate how complicated these instructions are.”
If you think you can pick up the phone and call the IRS for help with your questions – think again! According to the Bloomberg News in its article “IRS warns with cuts, lean times are ahead” the author claims that since the IRS is under a hiring freeze and operating with major funding cuts – they expect that half the calls they receive during this upcoming tax filing season will go unanswered. The budget cuts and subsequent staffing cuts “will make it tougher for taxpayers to get answers during the first filing season when US taxpayers will be dealing the implications of Obamacare”. So, in summary, it won’t be pretty, and don’t look to the IRS to be of much help!
So, what is a good, average American taxpayer to do? How can you file your taxes this year without screwing it all up and ending up a statistic in the latest group of casualties caused by Obamacare? According to John Koskinen, the head of the IRS, “Professional tax preparers, already used by more than half of Americans – will be the first line of defense”.
So, for now, we as professional tax preparers are bracing ourselves to handle a giant new federal tax program that is highly controversial, and with very little guidance or support from the federal government. All professional tax preparers need to be self-educated regarding the requirements and forms that have been introduced this year in conjunction with the Affordable Care Act, as well as a myriad of other changes, extensions and deletions that must be considered when completing a tax return. We all need to act as the interpreters as well as advisors to our clients as to the intricacies of the new laws and how to best minimize the impact of these changes on our clients’ finances.
But, the bottom line is this – taxpayers are responsible for the accuracy of the information on the tax returns that they sign. So, if you are not 100% confident that you understand what is required of you as a US citizen submitting your own return this year – then this is definitely the time to seek professional help.
If you are already a client of ours at Veltre Tax Services – please schedule your appointment as soon as possible, as we expect this to be a busy year. And, please feel free to call us with any questions or concerns that you may have. We will be mailing out additional information to our regular clients with further details and information regarding these changes in the tax laws and how to mitigate the impact on your finances.
If you are not a regular client of ours, then take this as an invitation to become one. We at Veltre Tax Services would be happy to accept you as a new client and share with you our 30+ years of experience in the tax preparation business. We are a family owned and operated business, located in the Bethel Park suburb of Pittsburgh. We are not stuffy CPA’s or attorneys who do tax prep work to supplement their full-time occupations. Tax preparation is our main area of expertise! With hands-on experience working with the IRS in upper-level management positions for thirteen years, Ralph Veltre, the founder of Veltre Tax Services, has an unprecedented level of real tax knowledge. Staffed exclusively by “Enrolled Agents”, who are fully authorized to represent you in any issues with the IRS, Veltre Tax Services has successfully represented numerous clients in IRS audits over the years. We are also well-versed and highly successful in the area of “Offers of Compromise”, and we typically do this at a fraction of the cost of an attorney or other “professional” who must pay for their high-priced TV advertising. Most of our business has grown from word of mouth referrals. We know our business and treat our clients well – and that’s what has allowed us to remain in business all these years.
So, for those of you who do not have a professional tax preparer, but feel that they may need help this year – please give us a call in order that we might schedule a first meeting. We can discuss any questions that you may have at that time.
Our Office Phone Number = 412-833-9415
Or, if you prefer, you can mail in your tax return paperwork for us to review and advise via phone conference.
Our Address is: Veltre Tax Service, 1725 Washington Rd., Suite # 206, Pittsburgh, PA 15241
Either way, I’m certain that we will be able to advise you and save you as much of your hard earned money as possible. Feel free to pass on our contact information to any of your family members or friends who may need help this year with their taxes also.
To all of our clients either old or new, let us use our years of knowledge and expertise to walk you through the maze of Obamacare. We will make sure that you are in compliance and not open to monetary penalties.
We look forward to working with you and many years of future collaboration.
Ralph V. Veltre and Company