New tax season troubles
2015 will be a year of growing pains because of your 2014 taxes. Not only do tax experts estimate more people asking for extensions this year, but an estimated 25 million more people will consult a tax expert.
The main source of the confusion, the Affordable Care Act. This tax season you’ll have to worry about something you’ve never had to worry about before – proving you have health insurance. The ACA requires you to have health insurance.
Certified Public Accountant Dean Owen says if you haven’t signed up, it’s important to secure healthcare now, or face a steep penalty. For a family of four this could add up to nearly $1,650.
Even if you meet the requirements, Owen says tax refunds for those who purchased insurance from online marketplaces like kynect will be significantly smaller.
Owen says, “Subsidy premiums for those who paid up on the exchange, those were advanced tax credits. You’ll have to true up at tax season, and estimates predict more people are going to owe money at tax season.
What’s more is how you’ll prove your health insurance. If you enrolled through the marketplace, you can use deductions from your W-2. But if you stayed with your private insurer, you’ll have to check with them on how to best prove your healthcare on your taxes.
Owen says there’s no way for the IRS to know if you’re insured, and that will cause a lot of time and confusion. Owen says, “The IRS gave large companies and health insurance companies an exemption this year from reporting to tax payers and to IRS who was covered and who wasn’t, so this year there’s no third party checking.”
If you have dependents, you’ll have to prove health coverage for every member of your family, for every month of the year. And if you got used to filling out the 1040 EZ form, you won’t be able to file your taxes with this form if you enrolled in the exchange.
Two other changes for this year’s tax season, small business owners have stricter regulations when it comes to reporting their repairs. And land owners must list each rental property, not lump them together.