Obamacare’s Impact On Taxes

Researchers have unveiled an ignorance on the part of the American public: a full 48 percent of people in the United States do not know that they must report their health insurance status on their 2014 federal income tax returns.

Tax Act

The tax-filing season is soon on its way, and most Americans 18 and over do not realize that health care and income taxes are connected. This information was uncovered by an online Intuit TurboTax Health Survey which was conducted by the well-known Harris Poll group.

According to the Affordable Care Act, otherwise dubbed “Obamacare,” all Americans have to show that they have qualifying health insurance coverage. Proof has to be presented when they file their 2014 income tax returns. If they do not, they can face a penalty.

obamacare photo
Photo by emanjungle

The study also shows that many Americans who do not have health insurance–a full 62 percent of them–know that they will incur a penalty if they do not have health insurance. However, 87 percent of people do not know that the time to avoid a tax penalty for the year 2014 has already come and gone. Insurance purchased during the current open enrollment time which goes through February 15th will be applied to income tax returns which are filed in 2016.

Sacha Adam, Affordable Care Act product leader for TurboTax software, says that many people in the United States do not understand there is a correlation between income taxes and health care insurance.

The Intuit survey also showed that 9 of 10 Americans have insurance, but those living in the South are less likely to have policies. Also, almost half of Americans do not know that premium tax credits are available to make health insurance more affordable for low to moderate income families. In addition, three-quarters of Americans who got health insurance through the government marketplace will renew it next year.

For more information on this important issue, go to TurboTaxHealth.com.

Income that is Not Taxable

Income that is Not Taxable

Almost all income earned by American citizens is taxable but there are some exceptions that the IRS makes based on taw law. Some forms of income that the IRS deems not to be nontaxable include adoption expense reimbursements, child support, gifts, worker’s compensation benefits, welfare benefits, and economic stimulus payments received during the last tax year.

Sometimes Taxable

Then there are a couple forms of income that are at times taxable and at other times nontaxable. When you are the beneficiary of a life insurance policy, those proceeds are not taxed. But if an insured … Read more at 2008 Taxes.

Income that is Not Taxable

Almost all income earned by American citizens is taxable but there are some exceptions that the IRS makes based on taw law. Some forms of income that the IRS deems not to be nontaxable include adoption expense reimbursements, child support, gifts, worker’s compensation benefits, welfare benefits, and economic stimulus payments received during the last tax year.

Sometimes Taxable

Then there are a couple forms of income that are at times taxable and at other times nontaxable. When you are the beneficiary of a life insurance policy, those proceeds are not taxed. But if an insured cashes out a life insurance policy than income from the event is taxable. Another good example is scholarship and grant money for college. Both scholarship and grant money used for tuition is not taxable. But money from either source used for room and board is taxable by the federal government.

For a more in-depth look at Taxable and Nontaxable Income take a look at IRS publication 525.