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Tax News: Affordable Care Act Taxes Update

Under the Affordable Care Act (ACA), every American is required to have healthcare coverage or an exemption. Yet, about 7.5 million Americans paid around $200 in penalties for not being covered in 2014, the IRS said. The year 2014 was the first year when people were required by law to have healthcare insurance.

During the 2015 filing season, it was mandatory for every taxpayer to indicate their healthcare status. Three-quarters of the 135 million filers checked the box for being insured throughout the year. As nearly 12 million taxpayers requested an extension, the total number of insured individuals is likely to rise after October 2015.

The average amount taxpayers received in premium tax credits was $3,400. In all, 2.7 million taxpayers claimed approximately $9 billion in premium tax credit. Those who had opted for advance payments of the premium tax credit totaled 3 million. They received approximately $10 billion in advanced payments.

Under the individual shared responsibility provision, those that are not covered each month of the year, or do not have an exemption, are required to make an individual shared responsibility payment.

During the 2015 filing season, the IRS found that approximately 7.5 million taxpayers reported $1.5 billion in individual shared responsibility payments. The average payment was $200. About 95% of the payments were $500 or less.

Before filing season, taxpayers were anxious about the paperwork they would be required to do because of the ACA. However, the IRS reports that about 76% of taxpayers only had to check the box to indicate that they were insured. Approximately 7 million dependents that did not have to report on their coverage, filed a return. That raised the total of insured individuals to 81%.

More than 5 million taxpayers did not check the box to indicate they had health insurance. IRS Commissioner John Koskinen said that they are “analyzing these cases to determine their status.”

The IRS said that it will continue to analyze the filings and send letters to taxpayers who did not report or make a payment. Taxpayers can amend their returns to comply with the ACA. The maximum time allowed to amend a return is three years.