Thinking About Tax Day Yet? The health law makes February 15 an important deadline by which many people had better start dealing with their taxes. This is the first year you’ll be required to answer questions about your health insurance coverage and possibly pay a penalty for NOT having coverage. If you do not have coverage, February 15 rather than April 15, is an important deadline for you.
For many people who get insurance through work, the change will be simple: checking a box on the tax form that says, “Yes, I had health insurance all year.” But for millions of others, their tax return will be far more complicated and costly if they did not have insurance. The penalty for NOT having insurance in 2014 is the greater of $95.00 per adult (and $47.50 per child) or 1% of household income above the level at which an uninsured individual is required to file a tax return–currently $9,500 per person and $19,000 per couple. Next year it’s the greater of $365 or 2%. That means a person whose 2014 taxable income was $23,000 but did not purchase insurance would pay 1 percent of income – $230 – not $95. The IRS can withhold the amount of the penalty from the taxpayer’s refund.
It’s too late to avoid penalties for 2014 but not too late to avoid penalties for 2015. Your best bet to avoid the increased penalties next year is to sign up for insurance by February 15, 2015, the end of the health law’s open enrollment period. If you don’t think about avoiding the penalties until April when you file your taxes (if you wait that long), it may be too late!