Health Care Law Adds New Tax Hurdle

Taxpayers will notice a new question inquiring about their health insurance when they file their 2014 taxes.

Most people will be able to simply check a box and move on.

At A Glance

Free Tax Assistance

There are many sites offering free tax filing assistance through the Volunteer Income Tax Assistance and the Tax Counseling for the Elderly programs. All tax preparers are certified by the Internal Revenue Service.

The IRS next week will release a complete list of area Volunteer Income Tax Assistance program sites. Call 800-906-9887 or go online to www.irs.gov/Individ….

The Volunteer Income Tax Assistance program is for people earning $53,000 or less, persons with disability, the elderly and limited English speaking taxpayers.

AARP’s Tax-Aide program that serves as the local Tax Counseling for the Elderly project and is geared to low- and middle-income retirees but is open to anyone.

Programs listed below are walk-in unless noted otherwise. The date is when the program starts and all run through the tax deadline of April 15.

Below are Care Community Center sites for the volunteer tax assistance program.

• Jan. 26: Care Community Center, 2510 N. 17th St., Suite 203, Rogers. 5:30-8:30 p.m. Monday through Thursday.

• Jan. 28: Center for NonProfits, 1200 W. Walnut St., Rogers. 9 a.m.-4 p.m. Wednesday through Saturday.

• Feb. 2: Genesis House, 1402 N. Inglewood St., Siloam Springs. 10 a.m.-2 p.m. Monday.

• Feb. 3: Fayetteville Boys & Girls Club, 560 N. Rupple Road, Fayetteville. 9 a.m.-3 p.m. Tuesday and Thursday. Call 479-246-0104 to set an appointment.

• Feb. 4 — Ridgeway Apartments, 308 Ridgeway St., Huntsville. 10 a.m.-2 p.m. Wednesday.

AARP’s Tax-Aide program operates five regional sites. Plans are in development for locations in Holiday Island, Berryville and Harrison.

• Feb. 2: Fayetteville Boys & Girls Club. 8:30 a.m.-2 p.m. Monday, Wednesday and Friday. Call 479-310-0087 at the end of the month to set an appointment.

• Feb. 2: Rogers Activity Center, 315 W. Olive St., Rogers. 9 a.m.-2 p.m. Monday, Wednesday and Friday.

Source: Staff Report

Two groups -- people who got coverage through the Health Insurance Marketplace and were eligible for a tax credit and those opting to forgo insurance in 2014 -- will run into the new tax code established by the Affordable Care Act.

"This is the biggest change in tax code in the past 20 years," said Craig McCollough, local H&R Block franchise owner. "This is one of the first times since signing up for coverage that people will see the effects of the law."

The Internal Revenue Service begins accepting 2014 tax returns Jan. 20. The filing deadline is April 15.

More than 75 percent of tax filers fall into the category of just checking a box indicating they had health coverage in 2014, said Katie Hill, spokeswoman for the U.S. Department of Health & Human Services. The department reported 6.6 million consumers selected a health plan or were automatically re-enrolled in the Federally Facilitated Marketplace as of Jan. 2.

There were 53,351 Arkansans enrolled in the federal Marketplace as of Dec. 15, according to the Arkansas Insurance Department.

Jennifer Liguori, director of the Legal Aid of Arkansas Low Income Taxpayer Clinic, said anyone who claimed an advanced tax credit to help pay for Marketplace coverage must wait until they receive a Form 1095-A before filing. Forms should be sent by the end of the month.

Taxpayers will use the information from the 1095 form to fill out Form 8962 that will reconcile their tax credits.

People eligible for subsidies when buying insurance through the Marketplace could take advantage of the advanced premium tax credits that reduced their monthly out-of-pocket premium payments. The advanced credits were based on estimates of projected 2014 income and other factors such as age, marital status and family size subject to change over the year.

The state's insurance department reports Arkansans with Marketplace plans paid an average of $94 a month out of pocket toward premiums and received a monthly tax credit of $293.

Liguori said people insured through the Marketplace can update life changes monthly, but said she doubts many people did that last year.

"If circumstances change, reimbursement changes if they call," she said. "Our general rule was to tell people to understate their income to get less of a credit, but who wants to do that?"

Incorrect estimates could change what a person is refunded or has to pay, McCollough said. He used the example of someone who estimated their income as $38,000 and received a $2,700 tax credit. At year's end their income was actually $46,000 and the tax credit decreased to $1,500, meaning they would see their tax refund decrease by $1,200.

"A lot of people don't view a difference between the IRS and H&R Block, and get mad at us if their return is not what they expected," he said.

H&R Block held a nationwide event Thursday that allowed anyone to come in and ask questions about how health insurance will impact their taxes. McCollough wouldn't provide numbers, but said quite a few local residents went to the event, but he was hoping more people would stop by.

"We know there are questions out there and some people just don't think they are impacted who will be surprised when they learn they are," he said.

People who went without insurance in 2014 face a tax penalty of $95 per adult and $47.50 for dependents, or 1 percent of household modified adjust income minus the filing threshold. The penalty is capped at $285 for a family. The filing threshold is the amount someone must earn before the IRS requires them to file a return. For example, a single person younger than 65 must file if their annual income exceeds $10,150.

The penalty increases to $325 per adult and $162.50 for dependents or 2 percent of household modified adjusted income up to $975 this year.

The IRS is calling the penalty an individual shared responsibility provision.

McCollough said there are several exemptions people can claim as why they don't have insurance, including a line that allows them to write in their own reason.

The U.S. adult uninsured rate in the last three months of 2014 was 12.9 percent, according to the Gallup-Healthways Well-Being Index. The Congressional Budget Office estimated that more than 80 percent of people who remain uninsured will qualify for an exemption.

Anyone receiving an advanced tax credit must file, even if they haven't had to in the past because of earning a low income.

Liguori said there are many free programs available to assist low-income taxpayers. Legal Aid's clinic is designed to help people with legal problems connected to taxes. She said they do a couple hundred consultations annually.

The IRS helps fund the Volunteer Income Tax Assistance and the Tax Counseling for the Elderly programs. The programs use IRS-certified volunteers to prepare returns for free.

The Volunteer Income Tax Assistance program is for people earning $53,000 or less, persons with disability, the elderly and limited English speaking taxpayers.

Laurie Wehmeyer is the volunteer program's coordinator for Care Community Center. She said the program filed about 2,000 returns last year and is unsure how the tax changes will impact this year's numbers.

This is her second year working with the volunteer program, but she worked for the IRS for 36 years.

"Honestly, right now I don't feel comfortable, but I hope that additional training will give me more basic knowledge," she said.

Community Center volunteers are scheduled to go through a four-hour training program next weekend.

Mike Rodda is district coordinator for AARP's Tax-Aide program that serves as the local Tax Counseling for the Elderly project. He said the program gets additional funding from other sources and the target audience is low- and middle-income retirees but is open to anyone.

"For those people who don't have coverage, this will be a big shock to them," he said. "And the fines just keep going up."

He said if people wait to file they may miss out on the opportunity to get insurance this year. Enrollment in the Marketplace closes Feb. 15.

"If they miss that date they will have to wait another year," he said.

NW News on 01/11/2015

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