Obamacare is making the least popular day — April 15 — even worse. For about 1 in 4 tax filers, it’s turning out to be a nightmare, with extra paperwork and penalties. And for high earners or anyone selling a piece of property or business, Obamacare means higher taxes.
If you enrolled in Obamacare in 2014 and got a subsidy to pay for it, you’re at risk of losing your refund. Surprise: you may even owe Uncle Sam money. Only 4 percent of people who signed up for Obamacare got the correct subsidy, so a whopping 96 percent will see their tax bill adjusted, some up, others down.
Who would design a system that’s right only 4 percent of the time?
Worse, the IRS sent out bungled subsidy information to some 800,000 filers, and now nearly all of them are being told they’ll have to wait, maybe until Oct. 15 to straighten it out. Too bad if they need their refund to make a mortgage payment.
Good luck getting help from IRS staff. Even IRS Commissioner John Koskinen admits the agency is answering only 43 percent of calls, and that’s after an average of 26 minutes on hold. No matter what your politics, you’ve got to agree this isn’t working.
This is the first tax day when all filers will have to attest that they and their family members had coverage throughout 2014 or pay a penalty. If you lacked coverage last year and want to avoid a penalty, you’ll have to fill out a new form 8965. So put your weekend plans on hold. The instruction manual for that form is 12 pages long.
For 2014, the penalty is 1 percent of adjusted household income, up to the cost of the lowest priced Obamacare plan (about $5,000 for an individual). A single person earning $40,000 a year will have to pay a $298.50 penalty.
To figure out precisely what you owe, use the “shared responsibility payment” work sheet in form 8965’s instruction book. The penalty doubles to 2 percent in 2015 and then rises to 2.95 percent in 2016.
The Obama administration is counting on holdouts, stung by penalties when they file this year, to surrender and sign up for coverage. So there’s a one-time special enrollment period after tax day for these holdouts only.
If you had subsidized Obamacare coverage in 2014, don’t plan on filing the simple 1040 –EZ form. You can’t use that anymore. And in addition to a 1040, you’ll have to fill out new form 8962, using the information you got in the mail on form 1095A.
There’s really bad news for about half of subsidized Obamacare enrollees. When you enrolled, your premium was based on what you estimated your income would be during 2014. Nearly everyone’s subsidy is wrong, because some filers earned more, others less, some families added a baby, others lost a member.
Half of these filers will have to pay something back, on average $794 according to the Kaiser Foundation. A family that estimated their income would be $48,000 and then lucked out when Dad got a promotion and Mom found a job putting their household income at $98,000 would have to pay their entire $7,267 subsidy back.
If you get a raise at work, your car payments don’t automatically go up. But your Obamacare premiums do, though you may not know it until tax time.
Meanwhile, affluent taxpayers (couples earning more than $250,000, singles more than $200,000) are feeling their own kind of pain. They got hit with a pair of tax hikes last year due to the Affordable Care Act and will pay them again this year – a 3.8 percent surtax on investment income and an extra 0.9 percent payroll tax.
New rules, new forms, new taxes, new sign-up periods. But just when people are grasping the mind-numbing complexities, all bets may be off come June. That’s when the U.S. Supreme Court will rule on the legality of Obamacare subsidies in 36 states. New Yorkers won’t be directly affected, but filers in most states could face a whole new reality come April 15, 2016.
They’ll need a doctor for the stress.
Betsy McCaughey is a patient advocate, constitutional scholar, syndicated columnist, regular contributor on Fox News and CNBC, and former lieutenant governor of New York. In 1993 she read the 1,362-page Clinton health bill, warned the nation what it said, and made history. McCaughey earned her Ph.D. in constitutional history from Columbia University. She is author of "Beating Obamacare 2014" and "Government by Choice: Inventing the United States Constitution." For more of Betsy's reports, Go Here Now.
© 2021 Newsmax. All rights reserved.