The Affordable Care Act's requirement that most Americans carry health insurance means that tax filers have to tell the U.S. government whether they had coverage in 2014 and whether they received Obamacare subsidies to help pay for it.
According to the Wall Street Journal
, many of the subsidy recipients could be in for an unpleasant surprise. Millions of them will be getting smaller tax refunds than they had expected or finding out that they owe the IRS because the subsidies they received to offset their Obamacare premiums turned out to be too generous.
According to an estimate by the tax firm H&R Block, as many as half of the 6.8 million Americans who received subsidies "may have to refund money to the government," the Journal reports.
Obamacare "is going to result in more confusion for existing clients, and many taxpayers may well be very disappointed by getting less money and possibly even owing money," said Charles McCabe
, president of Peoples Income Tax and the Income Tax School, a provider of tax preparation and education based in Richmond, Va.
"The whole implementation of Obamacare will be frustrating for tax preparers," he added.
The IRS said it would permit taxpayers who have applied for – but have yet to receive from the government – an exemption from the individual mandate to put the word "pending" on their tax forms.
By doing so, they would be able to file their taxes on time and avoid delays in obtaining their refunds.
But many taxpayers will learn that instead of qualifying for a refund, they owe the government money. Because people frequently make mistakes in estimating their future income, many Americans "may have gotten subsidies — based on their own projections of 2014 income — that were too generous," the Journal reported.
Tax credits for people eligible to use the health law's online exchanges would be, on average, too high by $208 if they were based on the applicants' most recent tax returns, according to economic modeling by John Graves
, a Vanderbilt University assistant professor.
When the ACA was passed, the amount of money that could be taken back from lower-income people who overestimated their incomes was capped at $250 for a single person and $400 for a household.
Those caps "were significantly raised in an effort to fund Medicare physician payments in late 2010, to as much as $2,500 for a family at the upper end of the income-eligibility range," the Journal reports.
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