Log In

Reset Password
News Education Local News Nation & World New Mexico

Health act throws tax curveball

Individuals should be aware of penalty, deadline

The Affordable Care Act will create some changes for taxpayers, but one of the biggest changes won’t be taking effect until the 2014 tax year.

The Obama administration announced late last year that tax penalties for not having health insurance won’t be applied until next year, meaning individuals who don’t sign up for health insurance won’t have to add the penalty to their tax bills until they file their 2014 income taxes in 2015.

Casey Lynch, a certified public accountant and former Fort Lewis College professor of accounting, said Obamacare will change how taxpayers do their returns in other ways, too.

In addition to the new penalty – which will be $95 per person next year – people who get government subsidies for their health-insurance premiums are having to predict what their income will be this year, Lynch said.

Taxpayers who end up making more than their predictions, may need to pay back some of their subsidy, Lynch said.

Unfortunately, he said many of the details about how the new tax laws will be enforced remain unclear since the IRS is behind in completing new tax regulations because of the government shutdown and sequestation.

Further, he said, many of the new laws are unclear.

“As long as Congress makes tax laws, it will never be simple,” he said.

Because of the uncertainties, Lynch said taxpayers may want to avoid being a “guinea pig” and wait awhile before filing their return.

Otherwise, he said individuals and business people should be thinking about getting ready to file their tax forms for 2013 by the April 15 deadline.

Lynch’s busiest time of year is getting ready to kick in next month through tax time in mid-April.

He says individuals will need to ensure they have the proper forms and tax information ready if they wish to be able to file early.

Filing a 1040EZ form is simple and requires only the information from a company W2 form, he said, adding that individuals can often file a simple tax return with an online program.

Business owners or people with varied investments or deductions will need to use more complex tax forms, he said.

Lynch said people with complicated tax deductions might need professional help from a CPA or tax consultant.

CPAs and accountants work to keep up with tax law changes passed by Congress to help ensure that taxpayers pay only what they are required to, not anymore.

“If your taxes are complicated at all, I’d suggest you contact a CPA,” he said.

Still, he suggested that individuals “keep yourself informed” about tax-law changes, so they will be aware of what credits and deductions might apply to your tax returns.

Individuals unable to file their tax returns by April 15 can get an extension.

But Lynch said not filing a return isn’t an option.

“That’s how Al Capone got caught,” he said, referring to the Prohibition-era Chicago mobster.

Sometimes people may forget to file their taxes or be unable to pay their taxes because of financial hardships, Lynch said.

Lynch is currently working with one client who had not filed for several years. The IRS will generally let someone in that case make arrangements to pay off their taxes without imposing any legal penalties.

“The IRS can’t collect back taxes while someone is in jail,” Lynch joked.


Reader Comments