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Tag Archive for Affordable Care Act

Obamacare Confusion – Real And Made Up

Our health care system is too complex. I am not only referring to the numerous tax provisions in the Affordable Care Act (ACA or Obamacare), but the system itself.  For example, if you have health insurance, do you know what it covers, how costs are computed, how insurance companies and the medical profession make money?

On March 4, the US Supreme Court heard oral argument in King v Burwell on whether individuals who obtained health insurance through the federal exchange (because their state did not establish its own exchange), are entitled to a Premium Tax Credit (PTC).  The PTC provision in the Code (Section 36B) makes reference to state exchange. The Administration interprets that as also meaning a federal exchange. Millions of individuals have obtained (in 2014) and are currently obtaining for 2015, a PTC to help pay for Read more

National Taxpayer Advocate Report To Congress Released

On 1/14/15, Nina Olson, the National Taxpayer Advocate released her required annual report to Congress about problems with the tax system. As noted on the NTA website, the key parts of this 700+ page report are:

Most Serious Problems Legislative Recommendations Most Litigated Issues Volume 2: TAS Research and Related Studies

Some key points noted include:

• Tax law complexity (here + Executive Summary)
• The need to put taxpayer bill of rights into the Internal Revenue Code (here)
• Problems due to inadequate funding of the IRS (here + Executive Summary) Read more

HR 30 – Defining Full-Time Worker For ACA Has Costs

The Affordable Care Act (ACA) imposes a penalty on “applicable large employers” starting in 2014 (changed to 2015 by the Administration). An ALE is an employer with 50 or more full-time or full-time equivalent workers. A full-time worker is one who works on average, 30 hours per week, or 130 hours per month.

There have been proposals to increase the threshold from 30 to 40, including this week – H.R. 30 of the new 114th Congress. Full-time employee is relevant in determining if an employer is an ALE, but more significantly, it is relevant in describing which employee the ALE has to offer coverage to (as well as the employee’s dependents up to age 26), in order to avoid the employer mandate penalty (IRC Section 4980H). An ALE only owes a penalty if one of its full-time employees obtains a Premium Tax Credit. The change from 30 to 40 Read more

ACA – Affordability of Health Insurance And Age

In filing our 2014 tax returns, we will all have to answer a new question (line 61 on the 2014 Form 1040) – did you and everyone in your family (spouses and dependents on the return) have health coverage for every month of 2014.  If anyone was lacking coverage for any month, they must next determine if they meet an exemption. If they do not, they owe the Individual Shared Responsibility Payment (penalty). One of the exemptions that many people might qualify for is that the health insurance available to them was unaffordable. If the employer offered coverage, you look at the cost of that coverage (cost less what employer contributes to that cost). If the employer did not offer coverage, you look at what the cost of coverage would have been in the Marketplace (Exchange). If you would have been eligible for a Premium Tax Credit (Section 36B), you must reduce that cost of Marketplace coverage Read more

Don’t Let The Recent Funding Cuts To IRS Give You A False Sense Of Complacency

With just weeks remaining before the new tax season opens, Congress walloped the IRS with $341 million in budget cuts. That’s in addition to earlier slashes to the IRS budget of more than $1 billion since 2010, resulting in nearly 13,000 employee layoffs.

Is that a wise choice or an act of spite toward an unpopular agency?

Congress touted that the cuts are much needed but to others it looks like something else – revenge. You see many in Congress are still fuming about this year’s earlier tax-exempt organization scandal and those missing Lerner emails. There are other members of Congress that are angry about reports of wasteful spending. And still there are other members of Congress that see this as a great opportunity to keep IRS from properly implementing pieces of the Affordable Care Act – yes, the same Act that Congress pushed Read more

An Odd Result For Premium Tax Credit Or Is It?

A few people have already pointed out this oddity in the Affordable Care Act including National Taxpayer Advocate Nina Olson in her 2013 Annual Report to Congress. Her excerpt notes that in determining if a person had affordable health coverage available to them from an employer, the measure is whether the self-only lowest cost coverage available to the employee costs 8% or less. It doesn’t matter if the family coverage offered by the employer is affordable. The relevance is that the family members won’t qualify for a Premium Tax Credit.

That seems odd if no “affordable” coverage was offered to the rest of the family. Isn’t that the point of the Affordable Care Act? To help make coverage affordable to everyone? Read more

Questions To Ask NOW Regarding The Affordable Care Act

As an astute navigator of the Internal Revenue Code over the last decade or so I’ve been asked by media heads for my opinions on the Affordable Care Act. Even though I have many to offer the fact of the matter is the deeper I get into the compliance reporting abyss the less sense it seems to make. The following four quotes I can hang my hat:

“For sure the ONLY thing we can rely on, barely, seems to be TITLE 26 and the best place to start your journey in these regards is with the Department of Health & Human Services.”

“The IRS is implementing the tax provisions of Affordable Care Act – and the 2014 filing season is shaping up to be a N-I-G-H-T-M-A-R-E! So be nice to our friends who work in bureaucracy, we are all in this together.” Read more

Premium Tax Credit Saga – New Developments And Dilemmas

On Friday (11/7/14), the US Supreme Court granted cert in King v. Burwell, 759 F.3d 358, No. 14-1158 (4th Cir., 7/22/14). This is the case where the court found the IRS regulations allowing individuals to claim a premium tax credit (PTC), even if they obtain coverage on a federal exchange rather than a state exchange. In contrast, in Halbig v. Burwell, 758 F.3d 390, No. 14-5018 (DC Cir., 7/22/14), a divided court found the IRS regulation invalid. The King and Halbig decisions were issued on the same day in July.

In September 2014, the Eastern District Court of Oklahoma issued a decision, State of Oklahoma v. Burwell, No. CIV-11-30-RAW (ED Ok, 9/30/14), finding the regulations invalid.

The DC Court of Appeals vacated its July decision, agreeing to hear the case en banc. Read more

Tax Compliance Alert: IRS Prepares For Impact of Obamacare On 2015 Tax Season

Introduction

On Wednesday, September 10th the Internal Revenue Service (hereinafter the “Service”) Commissioner John Koskinen (hereinafter “Commissioner Koskinen”) informed a congressional subcommittee about the Service’s progress on the Affordable Care Act and the impact that tax subsidies will have on the upcoming 2015 tax season. In a hearing before the House Ways and Means Health Subcommittee, Commissioner Koskinen discussed how the Service would be processing the premium tax credit, which helps subsidize the cost of health insurance coverage for eligible taxpayers.

Commissioner Koskinen duly noted that eligible taxpayers can choose to have their Read more

Top 5 2013 US Expat Tax Updates for Americans Living Abroad

The tax season is upon us and as expats begin the arduous task of gathering documents for their US tax preparation, it seems like a good time to provide an overview of the 2013 tax changes that may impact expats. The most important impact may be saving money, so let’s take a closer look!

1)     The Foreign Earned Income Exclusion (FEIE)

We love that the Foreign Earned Income Exclusion adjusts for inflation each year! Last year the FEIE was $95,100 and this year it jumps to $97,600. This means you deduct the first $97,600 you earn—you could eliminate your entire US tax liability with this credit alone. However, it’s important to remember that you must ‘qualify’ as an expat to be Read more

US Citizens Abroad and OBAMACARE

Commencing January 1, 2014, the “Affordable Care Act”, more derisively known as “OBAMACARE” will require that Americans carry so-called “minimum essential health coverage” (basically, health insurance) or suffer payment of a tax penalty. The provision applies to any individual who is a United States citizen or who qualifies as US “resident” for federal income tax purposes (e.g., a green card holder or one who meets the so-called “substantial presence” test). The rules apply to those individuals of all ages, including children. The married couple or adult who can claim a child or another individual as a dependent for federal income tax purposes is responsible for making the payment if the dependent does not have the required health coverage or if an exemption does not apply.

An important exemption exists for certain US persons who are living and working abroad if Read more

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