I am really confused on this percentage. At what % is an insurance plan deemed unaffordable? Half of sources say 8%, the other half 9.5%. I thought is was 9.5% and had changes from an earlier 8%. I tried to find updated info on the internet but is is a mess, and I was not successful. TTB says 8% and I usually trust them. Can anyone authoritative clarify?
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The latest info from a Block course I read said 9.5%.You have the right to remain silent. Anything you say will be misquoted, then used against you. -
The answer is "Yes"
The PENALTY is not applied if the insurance exceeds 8% of income.
In regards to the CREDIT, if the employee portion of "employer-sponsored minimum essential coverage" is over 9.5%, then it is NOT "affordable" and the taxpayer is eligible for a credit if he purchases it on the exchange.Comment
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You are welcome.
I had to spend 2 or 3 FULL days figuring out the credits, penalties, and what "cost sharing reductions" are.
In case anybody cares, the "cost sharing reductions" changed with the "final" rules. It now only apply to income below 250% of the Federal Poverty Level, not 400%, and some of the numbers changed. It took me forever to figure that out. However, this isn't really a tax issue, so unless you are helping your clients figure out purchasing the health insurance, it probably doesn't matter.
I'll be happy to TRY to help if you have any other questions.Last edited by TaxGuyBill; 10-31-2013, 04:17 PM.Comment
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Yes, please, and thanks again. Were can I find the final regs for this?
Next week I plan a kind of open house for tax questions people might have and I sure would like to understand as much as possible of some of these issues. Even though I will not help anyone to sign up I still feel that I need to understand the whole thing somewhat.Comment
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Does Obama Care have any effect on this coming tax season? (2013)This post is for discussion purposes only and should be verified with other sources before actual use.
Many times I post additional info on the post, Click on "message board" for updated content.Comment
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Employer Sponsored Coverage
I believe the 9.5% (of income) is the maximum employers may require employees to bear when deducting an employee share from their paycheck.
If things don't change, I believe employer-sponsored coverage will cease in a few short years. Health coverage is a huge expense for employers and already they have stopped coverage for 2 million employees and told them to go to the exchange and buy their insurance. The penalty is cheaper for them, and of course employers have been given an extra year before they have to pay the penalty.Comment
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Yes, the 0.9% additional Medicare tax on earned income, and the 3.8% Net Investment Income tax.
You also have to tell your clients to buy health insurance before March 31, 2014 or else you will have to add a penalty tax on their return next year. If they say they have insurance, then you have to tell them it has to be minimum essential coverage. If they ask you what that is, you have to tell them.
We now have to be health insurance experts.Comment
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Tax Preparers Required to Know?
Would you please tell me where I can find that tax preparers have to explain what the minimum essential coverage is? I would like to make a copy of it. Thanks a lot!Comment
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Gretel, here are some links:
The credit is in IRC 36B, the penalty is in IRC 5000A. There are no 'Regs' for these.
Most of the Affordable Care Act is not in the tax code, it's in "Title 42" of the Federal code.
The original law and the 3 (or more) final "rules" are EXTREMELY long and difficult, and are entered into various sections of Title 42 and it's regulations.
For my own usage, I made a 3 page summary sheet. Your are welcome to look at it and use it, but for legal reasons I can't confirm that it is 100% accurate. Here is the link.Last edited by TaxGuyBill; 11-01-2013, 06:11 PM.Comment
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Suppose you get a new client that tells you about income he received for painting empty apartments in the same apartment complex in which he lives. The landlord of the apartment does not give your client a W-2, but rather, a 1099-Misc. You explain to your client that since there was no withholding, your client is going to owe some taxes, which includes self-employment tax. Your client says he is not self-employed. This is just a side thing he does occasionally for his landlord when his regular painter isn't available.
Do you explain the rules about what is and what is not business income as it relates to self-employment tax, perhaps exploring the possibility that it was just a one-time job not subject to self-employment tax? Or do you tell your client to figure out the rules for himself on what is and is not subject to SE tax, and then to get back to you when he decides whether or not his income is subject to the tax?
Your client doesn't know what is and what is not minimum essential coverage. Your client doesn't know whether or not he is subject to the tax for not having minimum essential coverage.
Do you explain the rules about what is and what is not minimum essential coverage as it relates to the tax for not having minimum essential coverage? Or do you tell your client to figure out the rules for himself, and then to get back to you when he decides whether or not he is subject to the tax?Comment
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Thanks Gretel
Gretel, thanks for that info. I am always available to help any of my present and potential new clients with any new info. I am knowledgeable on most of these insurance laws already and am keeping up to date with any changes including watching all the changes with ObamaCare. If I don't know something I always make an effort to find out what needs to be known. I just didn't know of any "requirement" in regard to explaining anything on this subject to clients. Thanks again!Comment
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On the other hand, even if you explain in detail what minimum essential coverage is, they might have NO IDEA if their insurance has it or not. You might need to tell them "ask your insurance company" if it has minimum essential coverage.
All Bronze, Silver, Gold, and Platinum plans purchased through the exchange will have minimum essential coverage.Comment
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