Obamacare Imposes New Penalties Effective Tax Year 2014
Its official, in a 5-4 decision, the U. S. Supreme Court upheld the mandate which requires citizens and legal residents to maintain minimum health care coverage. The courts held that payments required by individuals who fail to maintain minimum health coverage are NOT considered a “penalty”, but a tax – and therefore are permissible. Or in other words, the mandate does not force an individual to buy insurances, but applies an additional “tax” to those who choose not to.
These taxes will be phased in from 2014 to 2016, and the good news is that the amount you’ll have to pay in taxes is likely to be much less than it would cost to purchase the insurance. Below you can see – by level of income – approximately what you can expect to pay per person if you choose to forgo the minimum:
- Less than $9,500 income = $0
- $9,500 – $37,000 income = $695
- $50,000 income = $1,000
- $75,000 income = $1,600
- $100,000 income = $2,250
- $125,000 income = $2,900
- $150,000 income = $3,500
- $175,000 income = $4,100
- $200,000 income = $4,700
- Over $200,000 = The cost of a “bronze” health-insurance plan (cost TBA)
All these taxes will be collected by the IRS. And while they cannot charge you criminally or seize your assets for missing these payments, they do have the ability to sue and collect up to 2 times the amount you owe.
In addition to the taxes you’d pay for not having the minimum health coverage, there are other changes and tax increases that entrepreneurs should be aware of. Some of these changes involve items such as investment income, Medicare, itemized deductions for medical expenses, etc.
A Tax Saving Incentive For Small Business Entrepreneurs
It may be a good idea to consult a CPA in Indianapolis for further detail about how all these changes will affect your business. In case you were unaware, for small businesses (defined as 25 or fewer employees and average annual wages of 50k or less), a tax credit for up to 50% of non elective contributions made on behalf of its employees helps offset part of the costs.