Looks like the IRS is going to be a little more lenient on people who don’t disclose if they have health insurance.
Under the Affordable Care Act, ACA, or Obamacare (whichever you prefer to call it) Americans must have health insurance coverage or pay a stiff penalty. For the 2016 tax year, the penalty could be as high as $2,085 per family. As part of a person’s normal tax return they have to indicate that they had health insurance coverage or file Form 8965 to explain why they qualify for an exemption from the mandate.
The Policy Rejecting Returns with No Health Insurance…
In past years, the IRS would accept a tax return even if the taxpayer chose to ignore this part of the return, but this year America’s taxing authority was set to reject any return where health insurance information wasn’t disclosed. That changed on February 6.
In response to an executive order from the Trump Administration telling federal agencies to “exercise all authority” to ease the regulatory burden of the ACA on taxpayers, the IRS rolled back its plans to reject returns that haveno mention of health insurance compliance.
…Is Rolled Back – Penalties Aren’t
The IRS cautions that the change only means that nothing changes. The IRS will do what it has done for the past couple of years: Taxpayers aren’t relieved of the burden of applicable penalties; the IRS will later contact them if they have questions about the taxpayer’s compliance and that could mean paying taxes and penalties.
Critics say that Trump’s mandate could hurt taxpayers more than it helps. By rejecting tax returns, many people would have corrected the error and refiled their return, saving interest and penalties that could come from the IRS catching the error at a future date.
And if you use popular tax-filing software, you may or may not have to include the information anyway. TaxAct users will still have to include health insurance information, but TurboTax customers won’t.
The Bottom Line
Save yourself from potential interest and penalties by including the information on your return. Your employer files forms with the IRS indicating your compliance anyway, so there’s no reason to not disclose.