by Michael Lodge
During last tax season many individuals who signed up for Obamacare on state exchanges were met with a big surprise. Since their income changed during the course of the year and they failed to notify their exchange – they owed taxes or lost the eligibility of tax incentives. Not a good thing when you think something is going to help you but instead it did the reverse.
If you’re enrolled in a Marketplace plan for 2016 and your income or household changed, you should report the changes as soon as possible. This is not a end of year responsibility, it is a right now when there is a change. A change could be a raise you got a work, maybe you took a distribution from your retirement account, or maybe an individual has their own insurance, a lot of things can change and those changes have to be reported when they happen, not at the end of the year when you do your tax return.
Why is it crucial to report changes immediately?
- If your income goes up or you lose a member of your household: You may qualify for less savings than you’re getting now. If you don’t report the change, you would wind up having to pay money back when you file your federal tax return for the year.
- If your income goes down or you gain a household member: You could qualify for more savings than you’re getting now. This could lower what you pay in monthly premiums. You could also qualify for Medicaid or CHIP coverage and could continue to pay more for a Marketplace plan by not reporting the change.
Here is a tool you can use to calculate change to your tax subsidy: Premium Tax Credit Change
CHANGES TO REPORT:
- Changes to income (all sources of income)
- Changes in health coverage: 1) Someone in your household getting an offer of job-based coverage, even if they don’t enroll in it, 2) Someone in your household getting coverage from a public program like Medicaid, CHIP, or Medicare
- Someone in your household losing coverage, like job-based coverage or Medicaid
- Changes to your household or individual members: Birth or adoption, placing a child for adoption or foster care, becoming pregnant, marriage or divorce, a child on your plan turning 26, death, gaining or losing a dependent some other way, moving to a permanent address in your state.
- Correction to name, date of birth, or Social Security Number
- Changes in status: change in disability status, change of tax filing status, change of citizenship or immigration status, change in status as an American Indian/Alaska Native or tribal member, incarceration or release from incarceration
Any change in income can affect your tax return at the end of the year. Make sure that you make the change as it happens so that at the end of the year when you think your going to get a tax subsidy and it goes away because you didn’t make the change with your exchange.
If you have any questions on tax issues send them to: email@example.com