As individuals and families prepare to file returns for tax year 2014, many will be confronted with questions they’ve never before had to answer on a tax return. This will be particularly true for low- and middle-income individuals, who are most affected by the reforms brought about by the Patient Protection and Affordable Care Act (ACA). Issues regarding Minimum Essential Health Coverage, tax penalties, and premium tax credits will no doubt arise.
Tax preparers will also be facing a new set of challenges when, for the first time ever, they may be assisting clients who are facing a tax penalty for not being enrolled in a qualified health insurance plan. Preparers will also need to educate these clients on the details of the ACA: how to avoid penalties; how to provide the necessary documentation from insurance companies and employers; how to navigate the various exchanges, and more. In addition, this year will involve completing a challenging new set of tax forms that up to this point, none of us have seen in any detail.
The new tax related provisions in the Affordable Care Act include tax hikes, limits to deductions, tax credits, tax breaks, and other changes. While a few of the changes directly affect the average American, tax increases primarily affect high earners (those making over $200,000 as an individual or $250,000 as a family), large businesses (those making over $250,000), and the health care industry, while tax credits primarily affect low-to-middle income Americans and small businesses.
Below is a quick overview of the key tax related provisions that may affect those without insurance, those who plan to go without insurance, and those who are struggling to afford insurance now:
Individual Mandate (new tax): Americans who can afford to must obtain minimum essential health coverage for 2014, get an exemption, or pay a per month fee.
Employer Mandate (new tax): In 2015 large employers must insure full time employees or pay a per employee fee. Over half of Americans get their insurance through work and the largest group of uninsured is currently the working poor.
Advanced Premium Tax Credits (tax break): Low-to-middle income Americans are eligible for tax credits which may reduce the upfront cost of premiums on health insurance purchased through their State’s “Health Insurance Marketplace”.
Small Business Tax Credits (tax break): Small businesses may be eligible for tax credits of up to 50% of their cost of employee premiums through the Small Business Health Options Program.
Tax preparation firms are expected to hire additional accountants to help individuals file their tax returns, which in turn will provide vital information to comply with the Affordable Care Act. Certified public accountants and data management firms are poised to assist businesses with record keeping and other assistance.
Without question, tax professionals and tax preparers are among the most important cogs in the Affordable Care Act machine. This is because the IRS is central to implementing the health care reform system.
With all of this said, we invite you to join TaxSlayer and VelaPoint Insurance for an upcoming live webcast entitled:
“How the Affordable Care Act will Generate Revenue for Your Business “
For over 40 years, TaxSlayer has provided its customers with tax preparation software and advice they can trust without reservation. By partnering with VelaPoint Insurance, this service can continue seamlessly in a post-healthcare-reform world. The knowledgeable tax professionals at TaxSlayer, paired with the licensed insurance experts at VelaPoint, will provide customers with a complete and robust resource this coming tax season.
The TaxSlayer/VelaPoint partnership will make it easier to navigate the tax implications of the Affordable Care Act, so don’t go it alone! Join us for this live webcast.