2014 was the primary 12 months Americans have needed to cope with tax credit and penalties pertaining to the Affordable Care Act (ACA). Approximately 7.5 million taxpayers reported paying a complete of $1.5 billion in penalties.
More Americans paid the penalty for not having healthcare protection in 2014 than the tax authorities initially estimated, the IRS commissioner confirmed in a letter to members of Congress. The overwhelming majority of US taxpayers had qualifying well being protection.
Following “numerous requests” from members of Congress, Internal Revenue Service commissioner John Koskinen despatched out a four-page letter with the information the company has collected up to now, after processing about 135 million out of the estimated 150 million tax returns for 2014.
Out of these returns, Koskinen wrote, roughly 7.5 million taxpayers reported a complete of $1.5 billion in “individual shared responsibility payments,” because the penalty for not having qualifying medical health insurance is named underneath the Affordable Care Act (ACA). Government estimates from earlier this 12 months predicted that variety of returns affected by the penalty would vary from $3-6 million, in keeping with NPR.
Under the ACA, often known as Obamacare, the 2014 particular person tax penalty for not having medical health insurance is 1 p.c of 1’s annual earnings or $95, whichever is larger.
According to the IRS commissioner, the penalties had been “relatively small,” with the typical fee round $200. He mentioned 85 p.c of the taxpayers who reported a penalty nonetheless obtained a tax refund.
Approximately 300,000 taxpayers who reported a penalty fee had been within the low-income group that ought to have claimed an exemption, Koskinen wrote, noting that the IRS would attain out to them and urge them to file an amended tax return.
About 76 p.c of taxpayers – roughly 102 million tax returns – checked the field indicating that they had qualifying protection all 12 months. Another 12 million taxpayers claimed an exemption, together with folks whose incomes had been too low and Native Americans.
There had been 5.1 million returns in 2014 that didn’t declare qualifying protection, an exemption, or a penalty. “We are analyzing these cases to determine their status,” Commissioner Koskinen wrote.
Reporting on the federal subsidies for certified taxpayers, the IRS chief mentioned about 2.7 million taxpayers claimed roughly $9 billion, with a median subsidy amounting to $3,400. Out of that quantity, solely 20 p.c reported subsidies of $5,000 or extra, whereas the remainder had been break up evenly between these receiving lower than $2,000 and people receiving between $2,000 and $5,000 in federal tax credit.