How Does The Affordable Care Act Affect Your Taxes?
How Does The Affordable Care Act Affect Your Taxes?
The Affordable Care Act (ACA) is also known as Obamacare. The ACA is a law that significantly impacts taxpayers. It has caused people to file their taxes differently and the changes continue to appear. Understanding how it directly affects your taxes and how you should file your taxes is critical for everyone in this new environment. The ACA introduced many provisions that have implications on your taxes, especially if you are an individual or family that qualifies for any of the subsidies offered by the government. The tax implications of the ACA fall into three categories: what must be reported on your taxes, how it affects other deductions and credits, and which form to use when filing. This article will explain some of the most important aspects of these implications so you can plan accordingly with your own personal circumstances
What Must Be Reported On Your Taxes?
As a result of the ACA, when you file your taxes, you may have to report several new healthcare-related items. Depending on your situation, you may have to include in your income: – Advance Payments of Premium Tax Credits – If you received advance payments of premium tax credits for health insurance coverage for you and/or your dependents, you’ll report them on your taxes on form 1095-A, Form 1095-B, or Form 1095-C. You report the advance payments on your taxes on Form 1040, Form 1040A, Form 1040EZ, or Form 1040-SS. – COBRA Continuation Coverage Premiums – If you and your dependents lost your health insurance coverage as a result of losing employment, getting divorced, or losing your COBRA coverage, or you never had health insurance coverage, you’ll report the COBRA premiums as income on your taxes. You report the COBRA premiums on your taxes on Form 1040, Form 1040A, Form 1040EZ, or Form 1040-SS. – Health Savings Account Deduction – If you had a Health Savings Account (HSA) that qualifies as an Archer MSA, you’ll report the HSA deduction as an above-the-line deduction on Form 1040, Form 1040A, or Form 1040EZ. – Health Insurance Deduction – If you had health insurance coverage that qualifies as medical coverage, you can claim a deduction on your taxes. You report the deduction on your taxes on Form 1040, Form 1040A, or Form 1040EZ.
How Does The ACA Affect Other Deductions & Credits?
ACA’s Impact on Health Savings Account (HSA) – Previously, individuals who paid for medical insurance could use the money they put in their Health Savings Account (HSA) as a tax deduction. Extending the tax break made it possible for more taxpayers to benefit from HSAs. The ACA has expanded the types of insurance that qualify for the deduction. Also, the ACA allowed dependents under the age of 26 to qualify for an HSA. ACA’s Impact on Health Insurance Premiums – Affordable Care Act (ACA) prohibits taxpayers from deducting their health insurance premiums on their income taxes. This is because taxpayers with lower incomes will receive subsidies from the government to offset the cost of health insurance. ACA’s Impact on Medical Expenses – The ACA reduced the threshold for taxpayers to deduct medical expenses from 10 percent of AGI to 7.5 percent of AGI. It also eliminated the ability to deduct medical expenses for individuals 65 years of age or older. ACA’s Impact on the Child Tax Credit – The ACA raised the age a child is considered a dependent from under 16 to under 26 years of age. This change can affect the child tax credit taxpayers claim on their taxes. ACA’s Impact on the Earned Income Tax Credit – The ACA allows taxpayers to combine their earned income tax credit with their health insurance subsidies to lower the cost of health insurance. ACA’s Impact on the Premium Tax Credit – The premium tax credit is one of the most important tax credits to know about under the ACA. It reduces the cost of health insurance premiums for taxpayers who are eligible.
Which Form To Use When Filing?
ACA’s Impact on the 1040 – In general, 1040 is used by taxpayers who are self-employed, participate in an HSA, itemize deductions, or don’t qualify for the standard deduction. ACA’s Impact on the 1040A – The 1040A is used by taxpayers who are under the age of 65 years old and don’t qualify for the standard deduction. ACA’s Impact on the 1040EZ – The 1040EZ is used by taxpayers who are under the age of 65 years old and don’t qualify for the standard deduction. They have taxable income of less than $100 or have no dependents. ACA’s Impact on the 1040-SS – The 1040-SS is used by taxpayers who are self-employed or pension recipients.
Health Care Tax Provisions That Remain The Same
ACA’s Impact on the Alternative Minimum Tax (AMT) – The AMT is a tax that can affect high-income taxpayers. The ACA has not changed the AMT. If your income is high enough, you may have to pay the AMT in addition to your regular tax. ACA’s Impact on Itemized Deductions – The ACA has not changed any itemized deductions. ACA’s Impact on the Child and Dependent Care Credit – The Child and Dependent Care Credit helps taxpayers who pay for child care and/or care for a dependent who cannot take care of themselves. The ACA has not changed the Child and Dependent Care Credit. ACA’s Impact on the Earned Income Tax Credit (EITC) – The EITC is a tax credit for low-income taxpayers. The ACA has not changed the EITC. ACA’s Impact on the HSA Contribution Limit – The HSA contribution limit will remain the same. You can contribute up to $3,450 for an individual and $6,900 for a family.
Health Care Tax Provisions That Are Changing
ACA’s Impact on the Alternative Minimum Tax (AMT) – The AMT is a tax that can affect high-income taxpayers. The ACA has increased the AMT income thresholds. ACA’s Impact on the Child and Dependent Care Credit – The Child and Dependent Care Credit helps taxpayers who pay for child care and/or care for a dependent who cannot take care of themselves. The AMT has changed the Child and Dependent Care Credit. ACA’s Impact on the Earned Income Tax Credit (EITC) – The EITC is a tax credit for low-income taxpayers. The AMT has reduced the EITC income thresholds. ACA’s Impact on the HSA Contribution Limit – The HSA contribution limit will increase according to medical inflation. You can contribute up to $3,550 for an individual and $6,900 for a family.
Conclusion
The Affordable Care Act has greatly impacted taxpayers’ experiences at tax time. It has introduced new items that must be reported on your taxes, and it has changed other deductions and credits that are claimed. Understanding how it directly affects your taxes and how you should file your taxes is critical for everyone in this new environment.
