Decreasing Tax Refunds will lead to Sticker Shock for Millions
Millions of Americans who are reliant on tax credits to pay for health insurance premiums may see their tax refunds reduced or even eliminated next year if their income this year is greater than expected. According to Jackson Hewitt Tax Services, more than a third of tax credit recipients will owe some money back, leading to large repayment liabilities. The problem is that having to pay back even 10 percent of an individual’s or family’s tax credit can decrease their refund by hundreds of dollars. The White House has not done an adequate job of informing Americans about the potential decrease in their tax refund. In addition, new IRS forms to administer tax credits are not expected to help Americans understand the convoluted relationship between tax credits and income, especially since tax experts find these forms complicated. While the amount that the IRS can collect is capped for most people, there is no cap for households making more than four times the federal poverty limit. As a result, people straddling this border will be hit the hardest by the ACA. This convoluted system of connecting subsidies to income is hurting consumers and is making healthcare insurance far more complicated than it needs to be.