Wednesday, October 8, 2014

No Health Insurance? You May Be Exempt from the Tax Penalty

Intuit writes: The Affordable Care Act is designed to ensure everyone has health insurance and imposes tax penalties on those who don’t. But the law recognizes there are legitimate reasons people may be exempt from this rule. In fact, an estimated 20 million Americans may qualify to waive the tax penalty this year.
To help taxpayers without health care coverage learn whether they qualify to avoid the penalty, Intuit Inc. INTU, -0.40% is providing the free TurboTax® Exemption Check. This new online service lets anyone without insurance determine, in just a few minutes, if they may be eligible to waive the health care tax penalty.
For Don West of Austin, Texas, 2014 has been a challenging year. Out of work and unable to pay mounting medical bills, he couldn’t afford insurance or won’t be able to pay the penalty for being uninsured.
“I wasn’t even aware that getting an exemption was an option. It was lucky that I found TurboTax Exemption Check because I was between a rock and a hard place,” said West. “It turns out, I just needed to answer a few simple questions and because I had unpaid medical bills, I was eligible to apply for an exemption from the fine.”
TurboTax already helps taxpayers sign up for health care they can afford. And for those who may qualify, TurboTax Exemption Check makes it simple to apply for a penalty exemption. By answering a few questions about themselves and their family, users quickly see if they may be eligible for one or more exemptions. TurboTax Exemption Check guides them through completing the application and files it for them, speeding the process. Users receive an email alert when their application has been submitted.
For uninsured taxpayers, using TurboTax Exemption Check now to determine whether they qualify for an exemption is a smart decision. It will ensure they have the right tax forms come tax time, speed up their tax preparation so they get their refund faster and make sure that some of their refund doesn't go toward paying the penalty for not having health insurance.
“Exemption Check provides a simple, free way for hard working Americans without health insurance to determine if they’re eligible to waive the tax penalty. It’s a vital service we’re proud to offer consumers,” said Sacha Adam, the Affordable Care Act product leader for TurboTax. “Its one more way TurboTax is simplifying the Affordable Care Act, translating the tax code into easy-to-answer questions that give people the confidence to navigate the new health care law and empower them to make the right choices for themselves and their families.”
Many Ways to Qualify
Currently, there are about 30 reasons someone may be exempt from the penalty for not having health insurance. Those who have medical expenses they couldn’t afford don’t have to pay the penalty. Neither do some with low incomes. For example, low-income individuals who aren’t required to file an income tax return don’t have to pay the penalty.
According to data from TurboTax Exemption Check, the top five exemption categories for which people are applying are:
1. Can’t afford health insurance; the lowest-priced coverage available would cost more than 8 percent of their household income
2. Had difficulty signing up for health insurance through a state or federal marketplace
3. Had medical expenses they couldn’t pay in the last 24 months that resulted in substantial debt
4. Had an individual insurance plan cancelled, and believe other marketplace plans are unaffordable
5. Received a shut off notice from a utility company
Exemptions are also available because of homelessness, eviction, foreclosure, bankruptcy, the death of a close family member or an experience with domestic violence. Members of Native American tribes also are not required to sign up for health insurance. Taxpayers can claim certain exemptions on their 2014 tax return when they file in 2015.
For more information, visit the TurboTax blog.