Randy J. Elder, CPA, P.C.

ObamaCare: The battle isn’t over but expect more complexity in tax returns

I’m not sure about you, but boy, I am glad the mid-term elections are finally over. As the final results are now in, we can turn our attention to what this means for the current administration and get something/anything done in Washington. One thing that came out of this election – it seems the controversy and battle over the Affordable Care Act (ACA) also known as ObamaCare, is far from over. While Republicans in Congress don’t have the votes needed to stand up to a Presidential veto and kill the health-care law outright, it is anticipated that they will work on repealing unpopular provisions of the law. That could be good news for business if they take on the employer mandate. Mitch McConnell, the new Senate majority leader, has indicated that he intends to use available means to push through measures that will roll back unpopular things like medical device tax and the employer mandate.

What I cover in this article as it relates to ObamaCare and taxes may change in future years but for now, ObamaCare is still in place, and you’ll want to make sure you know the 2014 tax implications. Whether you are for or against ObamaCare, as it stands today, it adds complexity to tax returns. Here’s how that plays out.

Expect more complexity in taxes

First, you should expect to see new, substantial, and sometimes complicated reporting requirements added to your 2014 tax returns to facilitate the ACA insurance mandate. Expect to receive new forms starting in January 2015 from your insurance companies, employers, and the marketplace.

These forms, which the government will also fill, will:
* Provide proof of ACA adequate monthly insurance coverage for all family members – required to avoid being assessed a penalty for not being insured.
* Provide the government, and you, with the amount of monthly advance premium tax credit (APTC), if applicable. These amounts are needed to determine if you are entitled to an additional PTC or if you must repay some portion of the APTC.

If you purchased insurance through the marketplace and your tax family changed (i.e. marriage or divorce) during the year or your household income changed and you did not report the change to the marketplace, things can get complicated. These changes must be factored into the insurance premiums, and APTC must be allocated among those insured by the month.

To complicate things even more, employers and insurance companies are allowed to use alternative means of providing the required information for 2014. This means you need to be on the lookout for substitute reporting not included on the official IRS forms.

While the majority of taxpayers will see added complexity on their 2014 tax returns, the biggest impact will be to those who qualified for the PTC and/or received APTC through the marketplace. If that is you, please consider professional assistance. And for everyone, expect more changes in the upcoming years as the battle over Obamacare continues. If you have questions or need help with this new tax return complexity, please give me a call.