Insurance

Does Having Obamacare Affect Your Taxes?

Having Obamacare does not affect taxes, In accordance with the Obamacare mandate, the majority of Americans have to file their federal income tax returns with proof of health insurance or risk a tax penalty. The Individual Shared Responsibility Payment was the name given to this fine.

But it’s important to remember that, as of 2019, the individual mandate penalty was essentially abolished by the Tax Cuts and Jobs Act of 2017. This implies that you won’t be penalized for not having health insurance if you didn’t have it in 2019 or later. You might be eligible for a premium tax credit if you have an Obamacare plan that you purchased through the Health Insurance Marketplace.

READ: Who is Obamacare Good For?

What Is Premium Tax Credit

The Affordable Care Act created the premium tax credit. For those who qualify, it lowers the cost of health insurance premiums for plans obtained via the Health Insurance Marketplace. The primary way that Obamacare affects your taxes is through the premium tax credit. With taxes, you have to include on your federal tax return any subsidies or premium tax credits that you were awarded throughout the year. If you don’t update your marketplace account in light of changes in your income during the year, you may underestimate or overestimate your credits or subsidies, which might have an impact on your tax due.

Your monthly health insurance premiums may be considerably lower if you take advantage of the Premium Tax Credit. You must sign up for a health insurance plan through the Health Insurance Marketplace in order to be eligible for the Premium Tax Credit. The government could give you an Advance Premium Tax Credit (APTC) based on your expected income. The purpose of this credit is to reduce your monthly health insurance plan payment.

READ: How Much Does Obamacare Cost Each Month?

Who Qualifies For A Premium Tax Credit?

You have to meet specific requirements in order to qualify for the Premium Tax Credit.

Income Level: Depending on the size and location of your family, your household income must be between a certain range, usually 100% and 400% of the federal poverty level (FPL). Depending on annual changes in the federal poverty threshold, this range could somewhat fluctuate.
Coverage through the Marketplace: The Health Insurance Marketplace, also referred to as the Exchange, is where you must obtain your health insurance coverage.
Not Eligible for Other Coverage: You shouldn’t be qualified for affordable employer-sponsored insurance that satisfies the standards of the Affordable Care Act (ACA) or government-sponsored healthcare programs like Medicaid or Medicare.
Filing Status: Even though it’s not normally necessary, you have to submit a federal tax return.

READ: What Is The Cheapest Obamacare Plan?

Your taxes may be impacted by Obamacare, mostly through premium tax credits, subsidies, and possible fines for continuing to be uninsured. Although the federal government has abolished the individual mandate penalty, several states may still apply their own fines. Comprehending the ways in which Obamacare affects your tax status is crucial to maintaining legal compliance and optimizing the advantages at your disposal. Hope the provided information is helpful, kindly leave a comment below in the comment section.

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