Are you wondering, “Can I get fined for not having Health Insurance?”
The “shared responsibility payment” also known as penalties for not having health insurance began in 2014. Note, the employer requirements were extended to 2015 and 2016 depending on the size of the business, but the individual penalties are applicable for the 2014 tax year returns which will be filed in 2015. Obviously, this does not apply to those who have qualifying health insurance through their work or those on medicaid, medicare, etc.
If you’re concerned about whether or not you can get fined or penalized for not having health insurance, watch the video below:
The penalty was the greater of either the flat dollar amount of 1% or the taxpayers excess income (defined below) for 2014. Please note, all these calculations will be getting larger over the next couple of years. The flat dollar amount per individual goes up from $95 in 2014 to $325 in 2015 to $695 in 2016. And the income percentage applied to taxpayers’ excess income goes up from 1% in 2014 to 2% in 2015 to 2.5% in 2016.
To explain how it works, let’s use an example. Let’s say you have a family of three with an $80,000 AGI. The child is under 18. Therefore, the flat dollar amount for 2014 is $227.50 (95.00 + 95.00 + 47.50). Children under 18 are counted at 1/2 the adult fee. However, excess income is the amount over the total of their standard deduction and exemptions. In this case their excess income is $55,750. For 2014 the standard deduction for MFJ is $12,400 and the exemptions are $3,950 each for a total of 11,850. Anyway, let’s assume my math is correct and their excess income is $55,750. One percent of that is $557.50, thus their penalty is $557.50.
As mentioned above, their penalty is the greater of the flat dollar amount or 1% of their excess income as defined by the IRS. For 2015 is the the larger of a larger flat dollar amount or 2% of their available income. Theses amounts go up again in 2016. Also, to determine “excess income” you use the standard deduction, whether or not you itemize. In other words, excess income can be greater than taxable income.
For those considering paying the penalty going forward, keep in mind that the penalty amount will be going up significantly over the next two years. It should be noted that there are a number of exceptions to paying the penalty.
As you probably already know, the fee for not having health insurance will be calculated on your tax return and taken out of any refund. For more information, feel free to contact us at firstname.lastname@example.org if you’ve been asking, “Can I get fined for not having health insurance?”