Health Insurance and How It Influences Taxes

Tax season is here and according to new laws, working Americans must provide proof of health insurance to the IRS. Failure to provide proof of insurance will be costly as the "shared responsibility payment" is the larger of the following: $95 per adult and $47.50 per child, or one percent of taxable income. Therefore, a family of four, for example, will cost $285 unless the taxable income is higher.

The fear is a lot of calculations and tabulations to figure out. In reality, tax forms have simplified proof of insurance for Americans. Many have standard coverage from the government, our jobs or privately and are independent. In that case, most will need to check a box and move forward. The box is listed at line 11 for 1040EZ filers, line 38 for 1040A filers and line 61 for 1040 filers. Dependents don't need to check anything. Skip the question and move on. Part time insurance holders must fill out Page 8965 before deciding if they need to check the box. People who have made less than $600 in a given year don't need to file and are considered exempt from paying the shared responsibility payment. Health Benefits

Page 8965 is or isn't an attachment depending on your situation. This is mainly for people who have coverage for part of the year. This will determine how much you owe in the penalty or if you are exempt from paying. There are three parts and depending on your situation, you will fill all or part of it. Part one contains exemptions already granted before filing. Part two is an exemption based on income. Part three is based on exemptions not covered in one or two. The separate shared responsibility worksheet is for people who don't qualify for any exemption. At this point, you will pay an amount. Follow the instructions to determine how much you owe. Place that amount on the same line where the check box is (do not check the box). Attach the form to the tax return.

The selectivity makes it hard for many people to receive exemptions. There's about thirty of them and financial hardship is a big factor in obtaining one of them. The others are as follows:

Uninsured for less than three months
The lowest coverage eats up more than 8 percent of the income
The income is too low to file
You are incarcerated and have no upcoming court judgments against you
You are not legally living or working in the United States

You are a member of the following: an approved health care sharing ministry, an approved religious sect with religious insurance obligations that include Medicare and Social Security and/or federally recognized Native American tribe with a Native American health provider

Many people won't have to go through Page 8965, but this is great information for the few who do need the information.

Still don’t have coverage? Call Lalani Insurance Agency LLC at 832-810-0210 for more information on health insurance.

Health Insurance and How It Influences Taxes

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