The Tax Season Filing Mess

This coming tax filing season taxpayers will be going more nuts than usual. You can just hear the grinding and mashing of teeth as the population tries to figure out the penalties and taxes for having inadequate health insurance. If it means anything, the IRS itself will be stretching its resources to try to piece together the web created by health care reform. Let's start with the easy stuff. Tax filers with health coverage all year for themselves and their dependents simply have to check a box on their returns. For most people this will include employer provided health insurance so long as it meets minimum federal standards. Also included will be Medicare, Medicaid, Tricare and Veterans coverage. Done. But for those who go without health insurance dealing with potential penalties, taxes and exemptions is required. The exemptions include people who simply can't afford coverage. These are employees whose share of premiums exceeds 8% of the household’s  AGI ( Gross Income less certain deductions =Adjusted Gross Income) The same is true for people who are not eligible for employer coverage if the cost of the basic bronze level plan in an exchange, less any tax credit for buying insurance, exceeds 8% of household AGI. Another exemption is for persons whose household incomes are below the threshold for filing a tax return. For single taxpayers $10,150 for joint filers $20,300. Lastly are hardship exemptions which prevent coverage. Fourteen qualifying circumstances exist. They include natural disasters, filing for bankruptcy, major property damage, shut off notices from utilities, foreclosure or eviction. Taxpayers will be required to file form 8965 to claim their health coverage exemptions. A worksheet will be provided on form 8965 to calculate taxes and penalties. Tax return preparers will be spending a good deal of their time wading through the forms and responding to questions in this area.