Millions of taxpayers have yet to file their 2014 federal tax returns. For a lot of folks, the issue is simple procrastination (guilty!).
Others, however, have put off filing because of the complexities of the Affordable Care Act, or ACA, popularly known as Obamacare.
One ACA component that could cause both filing and financial problems is the shared responsibility payment. This is the penalty individuals could face if they did not have ACA-acceptable insurance coverage for all of last year.
ACA exemption options
But you don’t have to worry about the tax penalty if you’re exempt from the ACA rules.
So just who gets an Obamacare coverage pass? The Internal Revenue Service says some common exemption situations are:
- Unaffordable coverage. The lowest amount of coverage you could find is considered unaffordable, which generally means the policy costs more than eight percent of your annual household income.
- Short coverage gap. You went without coverage for less than three consecutive months last year.
- General hardship. You were unable to obtain coverage because of homelessness, eviction, foreclosure, domestic violence, death of a close family member or unpaid medical bills.
- Income below the return filing threshold. You didn’t make enough to require that you file a tax return.
- Indian tribe. You are a member of a federally recognized Indian tribe, including an Alaska Native Claims Settlement Act Corporation Shareholder. This exemption also applies if you were eligible for services through an Indian health care provider or the Indian Health Service.
- Religious sects. You are a member of a religious sect in existence since December 31, 1950, that is recognized by the Social Security Administration as conscientiously opposed to accepting any insurance benefits, including Medicare and Social Security. The most commonly recognized group that qualifies for this exemption is the Amish.
No state Medicaid expansion
You also might qualify for an ACA exemption if you qualify for Medicaid coverage, but you live in a state that does not participate in Medicaid expansion under the ACA.
The states that the IRS currently lists as refusing to expand Medicaid include Alabama, Alaska, Florida, Georgia, Idaho, Indiana, Kansas, Louisiana, Maine, Michigan, Missouri, Mississippi, Montana, North Carolina, Nebraska, New Hampshire, Oklahoma, Pennsylvania, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, Wyoming and Wisconsin.
Check IRS site, forms
If you don’t have minimally acceptable ACA coverage and believe you might qualify for an exemption, check out the full list on IRS.gov.
Your tax preparer or tax preparation software also should be able to walk you through the exemption list.
You also can find additional information in the instructions to Form 8965. This is the form you must file to claim an exemption. If is one of four pieces of new tax paperwork created in connection with Obamacare.
Have you filed your taxes yet? Is the health care mandate at least part of the reason you’re putting off the task? If you have filed, did you run into any ACA problems?
More tax info from Bankrate
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Veteran contributing editor Kay Bell is the author of the book “The Truth About Paying Fewer Taxes” and co-author of the e-book “Future Millionaires’ Guidebook.”