Surprise: Poorest Obamacare Enrollees Face $530 IRS Tax Bill
The majority (52 percent) of Obamacare enrollees receiving an advance premium tax credit to purchase Obamacare insurance is facing the prospect of paying back $530 of that tax credit to the IRS, according to a new study from H&R Block. This clawback is reducing the refunds for these taxpayers by 17 percent this filing season.
Under Obamacare, taxpayers earning between 133 and 400 percent of the federal poverty level are eligible to receive a tax credit to help purchase insurance on Obamacare exchanges. This tax credit is calculated using old tax data of the recipients. The credit is advanced ahead of time to the taxpayer's insurance company. The taxpayer must reconcile at tax time the advance credit received with the actual credit she is eligible for.
Families of four earning less than $97,000 are eligible for a credit. So is a single mother with two children earning less than $80,000 and an unmarried/childless taxpayer earning less than about $12,000. By definition, these are the lowest income recipients of Obamacare health insurance outside the Medicaid-eligible population. Higher income taxpayers received no tax subsidy and aren't facing this tax season surprise.
According to the study, a majority of credit recipients--52 percent--have had to pay back the IRS an average of $530, reducing their refunds by an average of 17 percent.
It remains unclear how this information relates to the revelation last week that 800,000 healthcare.gov Obamacare customers (and a further 100,000 in California) received inaccurate 1095-A tax reporting forms. Doing the reconciliation described here would not be possible for these nearly 1 million families.
Also in the H&R Block report is the news that the individual mandate penalty is averaging $172. This is likely to rise in future years as the penalty for most taxpayers will equal 2.5 percent of their adjusted gross income. A family earning $100,000 would see a penalty of $2500 for failing to obtain qualified Obamacare health insurance.
There is a downside to voting based on likes and wants, instead of an informed opinion, that downside is that you are easily manipulated. Now own what you wanted, but were too lazy or too stupid to learn about.
So what?! The majority of the folks paying the 'penalty' will be paying it from the EIC or 'refund' amount from taxes they never paid anyway. It's STILL redistribution from the paying class to the moocher class back to the gov.
Money is real when it is backed by a substance having intrinsic value, as ours used to be; first with gold, then after 1933 with silver. I'm old enough, at 63 to remember being paid in Silver Certificates. It was only when we dropped that backing and went to "Federal Reserve Notes" that our money became trash.