Business & Financial Solutions’ tax experts are available to help clients understand how the ACA might affect filing income tax returns. While this is a significant vehicle for generating revenue for the federal government, there may be tax challenges. But the tax ramifications do not concern the greatest part of American taxpayers. Still, our tax preparers are up-to-date on the changes in the tax codes. And our practice is to stay on top of tax changes through continuing education courses.
The passing of the Affordable Care Act has resulted in 21 new taxes associated with it. And those tax changes are generally credits for low-income Americans. But there are tax increases for taxpayers who earn $200,000 annually on an individual basis. Also, this applies to those with an annual family income of $250,000 or more. And small business owners with annual incomes over $250,000 can also expect increased taxes.
The IRS estimates that 85% of all Americans who already had health insurance will not face any significant change. And their taxes will remain about the same. But the remaining 15% will be affected by three essential components to the ACA. Those are the individual mandate; the employer mandate; and the tax credits associated with healthcare exchange plan premium costs. Incidentally, it does not matter if it is an individual, families or small business owner. Also, the mandates will affect Individuals who had previously invested in healthcare savings accounts (HSAs) and flexible savings accounts (FSAs). And they will also see new limits on healthcare-related tax deductions.
The biggest tax issue comes from the individual mandate. For instance, states that U.S. adults who can afford to do so must sign up for healthcare. And they are required to do so, either directly through an insurance company, or via a state or federal healthcare insurance exchange. However, if the premium from the lowest-priced bronze plan purchased through a health insurance exchange in his or her home state is more than 8% of the purchaser’s household annual income, an exception is granted.
There are other exceptions where the purchaser’s annual household income is below the IRS tax filing statutes threshold. Also, citizens may be granted exemption based on religious beliefs, not being a U.S. citizen, or being in prison. Or if you belong to an American Indian tribe you may get an exception. Further details may be found on the Internal Revenue Service website at http://www.irs.gov/Affordable-Care-Act/Affordable-Care-Act-Tax-Provisions.