How Much Is the Obamacare Tax Penalty?
Under the Affordable Care Act, most Americans are required to have health insurance. When you file your taxes in April, you'll have to report whether or not you enrolled by the deadline.
To avoid a tax penalty for 2015, the enrollment deadline for most people was February 15, 2015. For 2016, you must get covered by January 31, 2016.
If you don't get covered and you don't qualify for an exemption, you'll have to pay a penalty when you file your tax return. The official name for this penalty is the individual shared responsibility payment.
Calculating the Obamacare Tax Penalty
For 2015, the penalty for going without health insurance is $325 per adult plus $162.50 per child (up to a maximum of $975 per family) or 2% of annual household income, whichever is greater. You'll make this payment when you file your taxes in April 2016.
For 2016, the fee will jump to $695 per adult plus $347.50 per child (with a maximum of $2,085) or 2.5% of family income. The fee will continue to increase each year until you get coverage.
For purposes of determining the penalty, "income" is defined as what your household earns in excess of the income-tax filing threshold. For 2015, the threshold is $10,300 for an individual and $20,600 for married couples filing jointly.
Rebecca is a single woman without health insurance who earns $50,000 in 2015. When she files her taxes in April 2016, her tax penalty will be based on $39,700 of her income. ($50,000 minus $10,300 equals $39,700.) Two percent of $39,700 is $794.00. Because that amount is greater than $325, Rebecca's penalty will be $794.00.
If you have insurance for part of the year, your penalty will be reduced proportionately. And the penalty can never exceed the sum of the national average premium for a bronze policy purchased through the exchange. For 2015, the IRS set the monthly national average premium for a bronze policy at $207 per month for an individual up to $1,035 per month for a family with five or more members.
Keep in mind that paying the fee doesn’t get you any kind of health coverage. You will have to pay the entire cost of your medical care on top of any fees that you owe.
The following video from the IRS explains the basics of the Obamacare tax penalty.
Obamacare Tax Penalty for 2015
The following table estimates the Obamacare tax penalty for a single taxpayer who is uninsured for the entire year in 2015. As discussed above, "income" is the amount earned in excess of $10,300, the income tax filing threshold for an individual in 2015.
|Annual Income Over $10, 300||2% of income||2015 Obamacare Tax||Per Month|
You can find an online calculator to help you determine your potential tax penalty at the Tax Policy Center.
To learn about what qualifies as health coverage under Obamacare and whether you are exempt, see Do I Have to Get Obamacare in New York?
For information about costs, see How Much Does Obamacare Cost in New York?
For tax help, see Obamacare and Taxes: What You Need to Know Before You File.
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