shared.1 Penalty Calculation Worksheet - Publication 8965
Penalty Calculation Worksheet – Publication 8965
Tax Penalties
Tax Penalties – Click to enlarge
New Tax Forms under Health Care Reform Publication 5187
New Tax Forms under Health Care Reform Publication 5187
Covered CA Penalty Chart
Covered CA Penalty Chart
Consumer Price Index
Consumer Price Index

In 2016 the tax penalty for not having Health Insurance that complies with the law, is $695 a year per adult and $347.50 per child or 2.5% of income whichever is higher. IRC 5000A (Mandate PLUS?Final Regulations  Proposed Rules  Congressional Budget Office  HN Pulse    After that there are cost of living adjustments and see chart below right.

Learn More ⇒Employee Handout 9.2015 showing 2016 Penalties  from Word & Brown ♦  Kaiser Foundation

How to calculate the Penalty
if you didn’t get coverage and don’t have an exemption.

Get a FREE MAGI Income subsidy calculation, premium quote and compare all companies by clicking here.

Instructions on how to appoint us as your Covered CA Certified Agent – No Extra Charge.  We only get compensated when you appoint us.

Resources & Links

CA Health Line 1.29.2015 6 M households could face penalties 

Be wary of tax scams  New York Times 1.31.2016

Click here to enroll in year around Agent support for your Covered CA account at no additional charge.

Analysis by TheHill.com 4.24.2015 says the penalty is too low to encourage enrollment.

Related Pages in the Mandate Section

The individual shared responsibility provision requires that you and each member of your family have qualifying health insurance, a health coverage exemption, or make a payment for any months without coverage or an exemption when you file. If you, your spouse and dependents had health insurance coverage all year, you will indicate this by simply checking a box on your tax return.

Here are some basic facts about the individual shared responsibility provision.

What is the individual shared responsibility provision?

The individual shared responsibility provision calls for each individual to have qualifying health care coverage – known as minimum essential coverage – for each month, qualify for an exemption, or make a payment when filing his or her federal income tax return.

What do I need to do if I am required to make a payment with my tax return?

If you have to make an individual shared responsibility payment, you will use the worksheets found in the instructions to Form 8965, Health Coverage Exemptions, to figure the shared responsibility payment amount due. You only make a payment for the months you did not have coverage or qualify for a coverage exemption.

To learn more, visit the Reporting and Calculating the Payment page on IRS.gov/aca, or use our interactive tool, Am I Eligible for a Coverage Exemption or Required to Make an Individual Shared Responsibility Payment?

What happens if I owe an individual shared responsibility payment, but I cannot afford to make the payment when filing my tax return?

The IRS routinely works with taxpayers who owe amounts they cannot afford to pay. The law prohibits the IRS from using liens or levies to collect any individual shared responsibility payment. However, if you owe a shared responsibility payment, the IRS may offset that liability against any tax refund that may be due to you.

For more information about the Affordable Care Act and your income tax return, visit IRS.gov/aca.

Issue Number:    HCTT-2016-18

Inside This Issue

Reporting Health Coverage on IRS Tax Forms

While most taxpayers will simply need to check a box on their tax return to indicate they had health coverage for all of 2015, there are a few forms and specific lines on Forms 1040, 1040A, and 1040EZ that relate to the health care law.

To help navigate health coverage reporting, you should consider filing your return electronically.Using tax preparation software is the best and simplest way to file a complete and accurate tax return as it guides you through the process and does all the math. There are a variety of electronic filing options, including free volunteer assistance, IRS Free File for taxpayers who qualify, commercial software, and professional assistance.

Here is information about reporting health coverage:

Form 8965, Health Coverage Exemptions

  • Complete this form if you need to claim a coverage exemption on your return or report a Marketplace-granted coverage exemption.
  • Use the worksheet in the Form 8965 Instructions if you need to calculate the shared responsibility payment.

Form 8962, Premium Tax Credit

  • Complete this form to claim this credit on your tax return, and to reconcile advance payments of the premium tax credit.

Form 1095, Health Care information Forms

  • If you enrolled in coverage through the Health Insurance Marketplace, you should receive Form 1095-A, Health Insurance Marketplace Statement, which will help complete Form 8962. Wait to file until you receive this form.
  • Your health coverage provider or your employer may furnish you with a Form 1095-B, Health Coverage, or Form 1095-C, Employer-Provided Health Insurance Offer and Coverage. You do not have to wait to receive these forms before your file your tax return.
  • See our questions and answers for more information about how these forms affect your tax return.

Form 1040

  • Line 46: Enter advance payments of the premium tax credit that must be repaid
  • Line 61: Report health coverage or enter individual shared responsibility payment
  • Line 69: Report net premium tax credit if the allowed premium tax credit is more than advance credit payments paid on your behalf

Form 1040-A

  • Line 29: Enter advance payments of the premium tax credit that must be repaid
  • Line 38: Report health coverage or enter individual shared responsibility payment
  • Line 45: Report net premium tax credit if the allowed premium tax credit is more than advance credit payments paid on your behalf

Form 1040-EZ

  • Line 11: Report health coverage or enter individual shared responsibility payment
  • Form 1040EZ cannot be used to report advance payments or to claim the premium tax credit

For more information about the Affordable Care Act and filing your 2015 income tax return visit IRS.gov/aca. Visit IRS.gov for more information on this topic if you file Form 1040-NR or 1040-NR-EZ.

Here’s the 4-1-1 on Calculating an Individual Shared Responsibility Payment

HCTT-2016-40

Historical

In 2015 – the tax penalty for not having Medical Coverage is about $325 a year or 2% of family income. IRC 5000A (Mandate PLUS?Final Regulations  Proposed Rules  Congressional Budget Office   The Fine Capped at  $2,448 per person and $12,240 for a family of five. HN Pulse

4 comments on “Tax Penalty 2.5% of Income Calculation Mandate

  1. I got medi-cal on Jan 2016. I made average $300 mo.

    In July I got temp job.and have grossed $25000.

    I informed medi-cal but they say I didn’t. I have netted $17000.

    I basically can’t pay rent AND have food.

    I understood Medi-cal stopped in Aug. But I think I may be wrong about that. I am getting sick with worry now that I may have to pay penalties, still be basically homeless and will have no more income beginning in Jan 2017.

    Can someone direct me to the best person to talk to or suggest something I can do now. I only signed up medi-cal because covered california said I ha d to and because of family pressure and covered california would not let me sign up with them.

    • There is no penalty and you don’t have to file taxes.

      I’m not a CPA or Tax Attorney so we will look at the IRS documents and please seek competent tax counsel. This answer is for educational purposes only.

      Take a look at IRS publication Health Coverage Exemptions and Instructions for Mandate Penalty aka shared responsiblity payment #8965 page 3, the first exemption is if your income is below the filing threshold. See page 18 for the filing thresholds. Married filing jointly under age 65 is $20,600. On page 6 part two, here’s an excerpt that says you don’t have to do anything:

      If you aren’t required to file a tax return and don’t wish to file a return, your tax household is exempt from the shared responsibility payment and you don’t need to file a return or do anything else to claim the coverage exemption.

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