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Tax News - October 14th, 2013

We keep you informed about the tax laws that affect your current AND future tax circumstances.

The INDIVIDUAL MANDATE Law Under Obamacare

This will be the first time in American history where just being a citizen requires you to buy health insurance. This mandate was accepted into law by the Supreme Court. They concluded that the Congress of the United States under law can tax its citizens. The way the law was structured, the fines are considered taxes, therefore legal. It states "the penalty is an excise tax that is assessed in the same manner as an assessable penalty under the Code."

Starting in 2014, all legal residents and U.S. citizens are REQUIRED to maintain "minimum essential coverage" for health care. This requirement under the Affordable Care Act (also known as Obamacare) is better known as the Individual Mandate. If any individual chooses not to follow this law, that person will be subject to a fine. This fine increases every year, starting in 2014 until it reaches its maximum fines in 2016. After that, the penalty is to adjust with inflation. The penalties for the next 3 years are:

*Total household penalty cannot exceed 300% of the per-adult penalty. So for 2016, the max penalty will be $2,085 (3 x $695). Household income is the sum of modified adjusted gross income of all individuals in the family (family size is number of individuals the taxpayer has for personal exemptions).

An uninsured individual under age 18 is given 1/2 the penalty as that of an adult. Also, if a tax payer files a joint return, the individual and his/her spouse are jointly liable for any penalty payments.

Do you have to be insured the entire year to not be penalized?

Would you like to learn more? What type of minimum "bronze level" plans count? Medicare, Medicaid, military, employer sponsored plans, government sponsored plans, plans in individual state exchanges? What are the income limits for subsidies or exemptions? How can the IRS enforce this? Are there any "grandfather" laws?

Fredrick Tax can help answer these complicated questions and issues! Above are links to the healthcare exchanges, now open for enrollment. Remember, this INDIVIDUAL MANDATE begins January 1st of 2014, so make sure you're covered!

We keep you informed about the tax laws that affect your current AND future tax circumstances.

Learn more about what the new laws mean to you! Make an appointment with Fredrick Tax today!

Past Articles

9/27/2016 - Crowdfunding & Taxes

10/18/2014 - Lebron James and State Income Taxes

10/14/2013 - The INDIVIDUAL MANDATE Law Under Obamacare

1/14/2013 - Fiscal Cliff PARTIALLY Averted for Current Tax Payers

9/3/2012 - Everyone's Taxes Are Going Up