You May be Eligible for The Obamacare Premium Tax Credit: Under The Affordable Care Act, aka “Obamacare,” everyone needs to have health insurance coverage in 2014, which makes health care a tax issue. Realizing that this is a financial burden on many Americans, a key component of the Affordable Care Act is what’s called the, “Premium Tax credit,” which helps people with lower incomes to comply.
If you purchase your health care coverage through the Health Insurance Marketplace, you might be eligible for this Premium Tax Credit.
Who is eligible for the Premium Tax Credit? In order to qualify for this tax credit, you’ll need to meet all of the following criteria. You must:
- buy your insurance through the Health Insurance Marketplace before the 2014 deadline
- be within a certain “moderate” income range
- be ineligible for coverage through your employer
- if you are married, you must file a joint return, and you can not be claimed as a dependent by any other taxpayer
How much is the Premium Tax Credit? The amount of the credit is different for each person, and will be determined by your total income, your state, and the answers given during the enrollment process in the Health Insurance Marketplace. You can get an estimate from a tax credit calculator online. This credit is now part of the filing process for all reputable tax software including TurboTax, H&R Block, and TaxAct.
If I’m eligible for the Premium Tax Credit, how can I get it? You’ll have two options:
- You can get the tax credit NOW. Choose to have part, or all of the estimated credit paid directly to your insurance company. This will significantly lower your monthly insurance cost (aka “premiums”)
- Or, you can choose to get the credit LATER. In this case, the Premium Tax credit will function as a deduction when you file your taxes next year. (Deducted against your total 2014 income in 2015)
Is the Obamacare Premium credit taxable? No. You will pay no taxes on the credit paid to your insurance company.
How do you claim the Premium Tax Credit on your tax return? This depends mostly on whether you have chosen to get the credit now or later.
- If you took the credit now: Subtract the advance payment that you received from the amount of the Premium Tax Credit calculated on your tax return. If the amount that you took is less than the amount calculated, you will get the balance added to your tax refund. (Or, subtracted from what you owe)
- If you chose to take the credit later: Just claim the full amount of the Premium Tax Credit on your 2014 tax return (filed in 2015) which will reduce the amount that you owe, or be added to your tax refund.
What if I choose not to get affordable Insurance during 2014? Then you will get a penalty on your next tax return. The deadline to signup is March 31, 2014. The idea of Obamacare is that everyone needs to have health insurance of some kind, just like everyone who drives is required to have car insurance.
If you are filing taxes on your own (without an accountant) in 2014, the top names in tax-filing software are on top of Obamacare, and what it means to you.
- TurboTax and Obamacare / Affordable Care Act – Using TurboTax? They guide you through Obamacare so that you understand it, and file your taxes properly
- H&R Block and Obamacare / Affordable Care Act – If you chose to file your taxes with H&R Block, this is a great resource for helping you understand the Affordable Health Care Act & Obamacare, and what it means to your specific tax return
*Regardless of your income, or eligibility for the Obamacare Premium Tax Credit, everyone benefits from coupons. Spend less on filing your taxes, and get free efile when you use our coupons for TurboTax 2015 and H&R Block tax filing software.
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