Life Changes for People With ACA Coverage Could Lead to Owing More Taxes
The 2015 tax filing season will be the first year that the Affordable Care Act’s (ACA) premium subsidies will be included in tax returns. According to a USA Today article hundreds of thousands of subsidy recipients could owe more on their tax returns for the upcoming tax season. Last week, the Centers for Medicare and Medicaid Services (CMS) reported at least 279,000 unresolved income discrepancies that could be reconciled on individual tax returns if CMS determines that subsidies were issued incorrectly.
When filing 2014 tax returns, the IRS will compare an individual’s reported income to their actual income, comparing the two with the subsidy amount received from the health insurance exchange. Many of the individuals that will be subject to changes in subsidy eligibility are those that have difficulty predicting their income, or have experienced a life event such as marriage, new jobs, or the birth of a child. If these changes are not reported, some individuals could be required to pay back large portions of their subsidy.