Tax season is right around the corner and this year brings another consequence of the Affordable Care Act. Many Americans are going to discover that instead of getting a tax refund, they will owe money to the IRS.
Tami Luhby of CNN Money reports:
Obamacare tax surprise looming
Obamacare enrollees who received subsidies to help pay for coverage will soon have to reconcile how much they actually earned in 2014 with how much they estimated when they applied many, many months ago.
This will likely lead to some very unhappy Americans. Those who underestimated their income either will receive smaller tax refunds or will owe the IRS money.
That’s because subsidies are actually tax credits and are based on annual income, but folks got their 2014 subsidy before knowing exactly what they’d make in 2014. So you’ll have to reconcile the two with the IRS during the upcoming tax filing season.
It won’t be surprising if many enrollees guessed wrong. The sign up period began in October 2013 and many people did not know what they’d earn in 2014. Some went off what they earned in 2012…
Those who underestimated their earnings could owe thousands of dollars, though there is a $2,500 cap for those who remain eligible for subsidies. The threshold for eligibility is based on income – $45,900 for an individual and $94,200 for a family in 2014.
Isn’t it great how Democrats have tied our healthcare system to our tax system?
Sarah Hurtubise of the Daily Caller has more:
Fuzzy Obamacare Subsidies Could Leave Half Of Obamacare Customers Owing The IRS
Up to half of the 6.8 million Americans who received premium subsidies in 2014 could end up owing the federal government money because of it this tax season, The Wall Street Journal reports.
According to an analysis by top tax firm H&R Block, as many as half of the customers who got premium subsidies may end up owing the federal government money after being overpaid throughout the year.
The problem is that customers have to estimate their income for the upcoming year when applying for Obamacare subsidies — and any mistakes or changes could mean that the IRS actually overpays them.
“The ACA is going to result in more confusion for existing clients and many taxpayers may well be very disappointed by getting less money and possibly even owing money,” Charles McCabe, president of Peoples Income Tax and the Income Tax School, told WSJ. “The whole implementation of Obamacare will be frustrating for tax preparers.”
Whatever happened to the promise of $2,500 in annual savings for families?
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