So, it’s tax time again. And most accountants will readily admit that the 2014 tax year is already proving to be particularly ominous. During the coming weeks we will address several of the new issues faced by taxpayers this time around. This week we turn our attention to one small aspect of the Affordable Care Act that has many taxpayers more than a bit concerned: the Premium Tax Credit.
Remember when you applied for your family’s health insurance plan last year? No? We were afraid of that. It seems rather optimistic to hope that busy people will remember all of the information they filled out when applying for health care using the federal or state marketplace. During that application process you were asked to estimate your household’s income for the 2014 calendar year. Based on that estimate, you were offered several health care plans from which to choose. If your income level qualified, your plans were eligible for subsidization by way of the Advance Premium Tax Credit. This means that the government helped to pay for the cost of your health insurance once they determined what you would be able to reasonably afford during the year. Nice idea, right?
Unfortunately, some taxpayers are now caught in quite the pickle because, as it turned out, income can be a tricky thing to estimate. If your actual income ended up differing from your estimate, you were likely eligible for a different amount of premium tax credit than what was advanced to you. And now, somebody owes something to somebody else. Either the government gave you too much assistance, or they didn’t give you enough. The underlying calculations behind this whole arrangement are really quite baffling, but what it all boils down to is that you may be in for a pleasant surprise or a rude awakening when you file your 2014 taxes, because that is exactly where the reckoning takes place.
Tax preparers and taxpayers are both finding themselves in the uncomfortable position of not quite knowing what to expect from this new twist on health care. At Gold Standard we are prepared to make this tax season as painless as possible for all of our clients… Which is more than we can say for that doctor’s visit you have funded with your newly acquired health insurance plan. So give us a call, send a tweet, email, or Facebook message if you feel underprepared to face the tax season on your own.
