Don't forget: This year's taxes include insurance information

Accountant Don Lynch goes over tax documents for a corporate client in his office at 1415 Andy Devine Ave. Lynch said tax returns are getting more complicated under the Affordable Care Act, which mandates health insurance coverage. (HUBBLE RAY SMITH/Miner)

Accountant Don Lynch goes over tax documents for a corporate client in his office at 1415 Andy Devine Ave. Lynch said tax returns are getting more complicated under the Affordable Care Act, which mandates health insurance coverage. (HUBBLE RAY SMITH/Miner)

KINGMAN - It's getting more complicated to file a tax return and taxpayers can expect to fill out more forms this year, especially proof of health insurance for 2014.

The extra work comes from the Affordable Care Act, commonly called Obamacare, which mandates that most Americans have health insurance or face a penalty based on family size and household income.

Many taxpayers will get frustrated and make potentially costly mistakes. Some may give up and not even file their return.

If they have medical benefits through work or Medicaid, they simply check a box.

If not, the penalty is $95 for uninsured adults and $47.50 for each uninsured child, up to $285, or 1 percent of modified adjusted gross income, whichever is greater.

The fee is capped at the national average for a "bronze" health plan available in the marketplace, or about $2,500 per person.

Don Lynch, a certified public accountant in Kingman, hasn't yet seen a client from the health care marketplace, but it's still early in the tax-filing period.

"With every return, you have to answer insurance questions and fill out responsibility forms," Lynch said in his office at 1415 Andy Devine Ave. "It's just a matter of annoyance.

"I think you saw results in the last election as people really understand the effect this is going to be."

About 90 percent of people who come into Liberty Taxes are covered through Medicare or Arizona Health Care Cost Containment System (AHCCCS), and the penalty is not an issue for them, tax preparer Ann Diaz said.

"If they owe because they didn't prepare for the penalty and that is happening, it's not very pleasant for them and it's not very pleasant for us to have to tell them," Diaz said.

If clients purchased health insurance through the Affordable Care Act, they must fill out additional paperwork such as Form 1095A that documents how much they paid, she said.

Consumers have until Feb. 15 to sign up for health insurance through the government marketplace. After that, they'll have to wait until the 2016 enrollment period.

Penalties are increasing next year to $325 for adults and $162.50 for each child, up to $975, or 2 percent of household income. They'll continue to increase every year.

For the 85 percent of Americans with health insurance making less than $250,000, most of the new taxes won't mean much of anything. The 15 percent of Americans without health insurance will be required to obtain health insurance or pay the penalty.

Lynch said some people are sitting on the fence because it's "incredibly complicated" to sign up and the deductibles are so high. The deductible under the bronze plan is $6,300, or $12,600 for a couple, and that's on top of $12,000 to $13,000 in premiums before tax credits for a family of four.

Diaz advises consumers to report total household income when applying for Obamacare. If one person makes $50,000 a year and gets a subsidized premium, and their uninsured spouse also makes $50,000 a year, they'll end up having to pay back the subsidy, which is usually more than the penalty for not having insurance, she noted.

There are certain exemptions to the tax penalty such as low-income households that cannot afford insurance. The IRS waived some penalties for taxpayers who received subsidized health coverage, including those who received a raise during the year or got a higher-paying job.

More information on the health care law tax provisions can be found on the IRS web site at www.irs.gov.