Everyone likes to gamble, play the lottery or Bingo every once in a while. Even a recreational gambler, will come across that quirk in the tax law. What quirk you wonder? That glitch that can actually cause you to pay more for your health insurance if you have gambling winnings. Yes, even if the overall result from gambling for the year is actually a loss. How on earth can this be, you wonder? Continue reading
Do not lose your insurance subsidy in 2016 just because you have not filed your 2014 tax return! If you are one of the over 1 million individuals who received an Obamacare health insurance premium subsidy last year and you have yet to file your 2014 tax return, you are risking your opportunity to receive the insurance subsidy in 2016.
Insurance Subsidy and the Preliminary Tax Credit
The insurance subsidy is paid by the government to your insurer to reduce the premiums you owe. It is actually an advance payment of the premium tax credit (PTC) based upon your “estimated” income for the year. Your actual PTC is based on your “actual” income as determined on your tax return. If the advance PTC (subsidy) was less than the actual PTC as determined on your tax return, you are entitled to the difference. On the other hand, if your actual PTC is less than the advance amount, you may owe Uncle Sam some or all of the difference.
Whether you are entitled to additional PTC or owe some back cannot be determined without filing your return. The IRS estimates that 710,000 individuals who received an advance PTC have yet to file a 2014 return or did not file an extension. Add that to the approximately 360,000 taxpayers who received an advance PTC and have filed an extension, and there are over 1 million individuals who need to reconcile their 2014 PTC who have not yet filed.
The Marketplace will determine eligibility for advance PTC for the 2016 coverage year during the fall of 2015. If you have not filed your 2014 return yet, you can substantially increase your chances of avoiding a gap in receiving this help if you file your 2014 tax return as soon as possible. This is true even if you have an extension until October 15th.
Obamacare Forms are not Easy
Navigating the complicated Obamacare forms developed by the IRS is difficult for many taxpayers. Most taxpayers seek professional assistance, and they should because accuracy is key. The IRS is currently sending letters to individuals who received advance PTC subsidies and have yet to file. The letter encourages taxpayers to file within 30 days of the date of the letter. This is to avoid a gap in receiving advance payments of the PTC in 2016.
It is Never a Good Ideal Not to File
Always file your returns, even if you owe and cannot pay. The IRS just gets more aggressive as time goes on. So whether you:
- Do not feel you can do your own return
- Are afraid you may owe some of the PTC back, or
- Think you may be subject to penalties for failing to have health insurance coverage
We encourage you to give Alex Franch, BS EA a call at 781-849-7200. There are penalty exceptions for being uninsured. If you owe a Premium Tax Credit repayment there is a possibility it can be reduced, and it may all work out in the end. Procrastinating is not going to change the outcome, but it could put your 2016 advance Premium Tax Credit at risk. Who knows, you may even be entitled to more PTC and a refund.
You can read more about the Premium Tax Credit here.
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