Tax Chaos Due to Obamacare Subsidies
June 16, 2014
The Washington Examiner reports that Obamacare's confusing subsidies, fines and the implementation of previously delayed mandates will make the 2015 tax season chaotic.
According to Ryan Ellis, a national tax expert, "[T]he upcoming tax filing season has the potential to be the most chaotic in years." Ellis told the House Ways and Means subcommittees on Health and Oversight that low-income Americans could end up paying $500 in unexpected taxes. Why?
When low- and middle-income Americans go to purchase insurance in the Obamacare exchanges, the subsidies that they receive are based on their estimated income for that year. Based on that estimate, the government sends a credit to the enrollee's insurance company. But what if the government estimates wrongly?
- If the government projects that an enrollee will earn $30,000 in 2014, it will send that enrollee a subsidy of $2,000.
- However, if the enrollee actually earns $40,000 in 2014, he is only eligible for a subsidy of $1,500.
- At that point, based on income factors, the enrollee will owe the federal government some or all of the $500 difference.
The taxpayer, Ellis explained, will be liable to the Internal Revenue Service, even though the government made the original mistake when it miscalculated the subsidy.
Source: Paul Bedard, "Tax Expert: Obamacare Will Make 2015 IRS Filings 'Most Chaotic in Years,'" Washington Examiner, June 10, 2014.
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