Estimated read time: 3-4 minutes
This archived news story is available only for your personal, non-commercial use. Information in the story may be outdated or superseded by additional information. Reading or replaying the story in its archived form does not constitute a republication of the story.
SALT LAKE CITY — A banner year might be in the works for tax preparers thanks to the Affordable Care Act, or Obamacare.
Americans will need to calculate how their health care figures in with their taxes. Tax preparers face several new forms to fill out, and it's important to get those health care calculations right before taxes are filed. Mistakes could mean delays, interest charges and even penalties. At least that's what the tax professionals say.
Jake Johnstun of Integrated Accounting is already bracing for a very busy tax season.
"We're going to get a lot of phone calls," he said. "We've amped up our staff, and I'm sure others have as well, to prepare for an influx of clientele because of the complexity we're dealing with."
Johnstun said much of that complexity comes from the Affordable Care Act, the largest change to hit the tax code in 20 years. For many taxpayers, that means more forms to fill out and potentially more mistakes.
"So that will be a challenge for people used to filling out a very simple return, and now the returns are much more complex," he said.
How complex? Let's say a person bought a health insurance plan from the state or federal market place and got a subsidy to lower that plan's monthly premium. That person now must fill out a new form that matches the payments made to his or her plan with his or her actual income in 2014.
This is no cakewalk, Johnstun said. The instructions for this new form alone run 15 pages.
"If you complete the form incorrectly, then the IRS will find that and correct your tax return and send you a bill, or a refund, depending on how you did the form," he explained.
That fix could take weeks and could mean fines and interest charges if a person owes.
Also, those who made a mistake on estimating income when they signed up for the plan may have to pay up.
"People can get bonuses, raises, make more money through the year," Johnstun said. "When that's reconciled at the end of the year, that could come back and bite them."
So, if it turns out people earned more money than they thought they were going to get, the IRS will say, "Sorry, you got too big of a subsidy."
They'll now have to make due with a smaller tax refund.
Or, if a person's estimate was way off, he or she could end up owing money.
"I think next year it will be a smoother process because people will be used to the penalty and used to this tax credit form," Johnstun said.
Good news: Those who got Medicare or Medicaid through their job just check the box on their form 10-40 to indicate they were covered all year. No other form is necessary.
However, those who skipped out on health insurance coverage without meeting one of the 33 qualifying exemptions face a penalty. It starts at $95 but could go up to 1 percent of household income.
Next year, that penalty goes up to 2 percent.
