The Affordable Care Act Will Complicate Tax Season for Many Americans

This tax season promises to bring confusion to millions of U.S. households.

For the first time, taxpayers will be required to report their health insurance coverage on their returns. For people who obtained coverage through their employers, the change is pretty simple. They will merely have to check a box on their returns. But people who obtained coverage through the federal or state marketplaces will need to submit an entirely new tax form, and those who received subsidies will require additional paperwork.

People who lacked coverage are subject to fines, unless they qualify for waivers, in which case they must submit still more paperwork.  

Complications may arise if taxpayers received subsidies and their financial situation changed during the year. Many people may not know that they are required to inform the exchanges if they switch jobs, get married, have a child or see a change in their income.

And that’s just the tip of the iceberg. The IRS’s synopsis of “Affordable Care Act Tax Provisions” runs nearly 6,000 words and contains numerous links to various regulations, notices and technical releases.
Where is a consumer to turn if he or she has questions about the tax implications of the Affordable Care Act? The Internal Revenue Service taxpayer hot line may not be much help, according to an Associated Press article.

The IRS has reduced taxpayer services due to budget cuts totaling $346 million for the current budget year. Nearly 100 million people will call the agency for assistance this year, but only about half of those will be able to get through and waits are likely to exceed 30 minutes, IRS Commissioner John Koskinen told the AP.

A professional insurance and financial advisor can help clients understand many of the tax and financial implications of the ACA. As new provisions on the health care law come into effect, the role of the advisor is more important than ever.

Also from the AP story:
  • Refunds may be delayed by a week or more for people who file paper returns.
  • The number of IRS audits is likely to decrease due to budget cuts.
  • The IRS may need to furlough workers at some point in 2015.


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