From the Desk of Bob McNett…..
Recipients of ACA subsidies could get a nice surprise……or a shocking setback.
If you received a subsidy from the government to help you pay for health insurance for tax year 2014, there’s a pretty good chance that you may get either a pleasant or a nasty surprise.
When applying for the subsidy, taxpayers had to estimate their income for the upcoming year.
If your actual income was higher or lower, or if you married or divorced, had a baby or other life event, these events could change the amount of the subsidy you were eligible for. If you qualified for a subsidy that is higher than what you recieved, you’ll get more back on your tax refund. If the actual subsidy should have been lower, you will owe more taxes.
Ellen Goldust makes just $30,000 yearly as a freelance book editor.
She applied for insurance and qualified for a $250 monthly subsidy. However, she chose to not take all the subsidy she qualified for. “With Obamacare being new, I didn’t know what was going to happen,” she says. “I didn’t want to take a chance I would have to come up with a chunk of money.”
As a result, her tax refund is around $3,900, about twice what she estimated. With a son starting college next year, “it was like winning the lottery,” she says.
However, roughly half of all households that received subsidies last year could owe some or part of that back.
That’s what happened to Jody Cedzidlo. She got married in 2014 to her fiance that was also receiving an Obamacare subsidy. They didn’t realize until they filed their taxes how that life event changed things.
“Even though we have the same two incomes, when you add them together, we’re not anywhere near eligible for the same subsidies,”
Cedzidlo says.
At this point, their accountant has told them they will owe around $1,800 in additional taxation as a result of getting married in 2014.
If you are getting a subsidy to assist in paying for your health insurance, be sure to call your broker or the exchange itself if you have a change in income or a life event during the year. The subsidy will then be adjusted to reflect you new status.
Avoid that Obamacare surprise!
Bob McNett
The McNett Agency
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