It feels like every other year marks some major changes to healthcare plans. With the healthcare reform law in full effect, there are some things that you need to know about claiming your healthcare insurance on your taxes.

What to Claim

It is mandatory for all Americans to have some kind of health care. If you do not have a health care plan through an employer, Medicare, or Medicaid, you must purchase a new plan through the market exchange. While a lot of people still haven’t signed up for some kind of health insurance through the government’s new website, not being able to list insurance coverage on your tax forms (there’s now a line for that) means incurring a penalty. The amount that you will have to pay as a form of penalty will be determined by the IRS. You can purchase insurance that isn’t Medicare or Medicaid on the open market, but in order to receive many of the credits, that insurance must be purchased through the exchange.

Some Additional Changes

• Penalties: Those penalties that we mentioned above will start at $95 or 1% of your income. This amount is on a per-person basis. The amount will be assessed according to which amount is greater ($95 or 1%). If you’re thinking that the penalty is still cheaper than signing up for an insurance plan, think again – that rate will rise to a penalty of $695 or 2.5% of your income by the year 2016. So, make sure that you have a health care plan in place – you will have to claim this amount. An uncovered child will get you a penalty of ½ a percent. For example, if a married couple with one child does not have qualified insurance, they may be penalized either $237.50 or 2.5% of their modified adjusted gross income.
• Tax breaks: What happens if you can’t afford coverage? In order to get any kind of tax break, you have to prove that you make between 133% and 400% of the poverty level set by the U.S. Government. If this sounds tricky, contact your Fort Collins CPA to figure out the details.
• Healthcare deductions: The rules for deductions in the healthcare sphere have changed, and you will no longer be able to deduct as much as was once possible. In order to deduct medical expenses, you have to be able to show that your expenses totaled more than 10% of your income. Once again, there are many different factors at play here, and this is just the tip of the iceberg. For more details about healthcare deductions, contact your Fort Collins CPA.
• Self-employment: Even if you are self-employed, you still have to have some form of health care. Since self-employment deductions tend to be tricky, our advice is to contact a Fort Collins CPA for help figuring out your small business tax preparation and documents.

Your Small Business Tax Preparation

In some cases, it is worth the time and effort to go through various calculations and deduct things against your income or percentage of income, but you may not want to waste your time in other instances. Since small business tax preparation can be tricky, you may want to book an appointment with SJ Wick to figure out where you stand when it comes to health deductions and other tax specifics.

A number of things have changed this year in terms of healthcare and taxes. Make sure that you have everything you need to include all the necessary details on your tax forms, and figure out whether or not you need some additional paperwork before you file. SJ Wick can help you with all of those details, so feel free to give us a call to work on your tax preparation. You can also leave a note on this blog if you have any questions, or simply reach out to us at any time through phone or email.