Here’s something that may need to be clarified this tax season. Despite the ongoing debate in Washington over a repeal of the Affordable Care Act, the law’s requirement for people to be enrolled in health coverage or face a tax penalty is still on the books.
“People should go ahead and take care of their taxes as they would, as if the law hasn’t changed," said Geoff Oliver, a staff attorney for Legal Services of Eastern Missouri. "Because at this point the law hasn’t changed.”
The individual mandate is one of the least popular components of the federal health care law and a frequent target of its critics. The GOP replacement plan also penalizes people for not having insurance, by having their premium rise by 30 percent when they re-enroll. The ACA charges a tax penalty of 2.5 percent of a household’s income, or $695 per adult — whichever is larger — up to a maximum. There are several exceptions, including if coverage was unaffordable or if a person was uninsured for three months or less. (A full list of exemptions can be found here.)
In January, President Donald Trump signed an executive order directing federal agencies to “waive, defer, grant exemptions from, or delay” parts of the Affordable Care Act that may impose a financial burden on individuals, creating some confusion as to how tax season would be handled.
According to public guidance from the Internal Revenue Service, the agency will not automatically reject tax returns from taxpayers who don't report if they were uninsured during 2016. But that doesn’t mean you won’t get audited.
“They won’t kick the returns back but you still might get a notice for a penalty,” said Pam Rethemeyer, a Florissant CPA and vice president of the Missouri Society of Accountants.
The filing deadline for taxes this year is April 18.
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