How the Affordable Care Act will affect your taxes

The Affordable Care Act mandates that every American have health insurance or else, face hefty tax penalties.

“The penalties can be as little as $95 or as much as one percent of your adjusted gross income up to $285,” saidtax expert and enrolled agent Carlos C. Lopez.

That fee is just for the 2014 filing season. Lopez said that number will increase every year. If you don’t have coverage going into the 2015 filing season, you will pay $325 per person for the year or2 percentof your yearly household income. For example, if you’re making $50,000 a year, that’s a $2,000 tax penalty.
But there are some exceptions.

“Let’s say for example you’re a student and you lived at your parents’ home, andlet’s say you finished school May 20th. So you have three months from that date to enroll into a health care plan,” said Lopez.

You’re also exempt from the fee if you’re covered by Medi-Cal, Medi-Care or are undocumented. But Lopez said in those instances to watch out for fraud.
Earlier this month he had an undocumented client inform him that a tax office in Salinas said he owned $1,500 in penalty fees.

“So they go ‘what do we do?’ Andthe tax officesaid ‘well, for $500 I’ll make the penalty go away.’ And they never had a penalty,” said Lopez.

Lopez said the easiest way to dodge the fees is to get health insurance, because in some cases he said the penalties can be more than the coverage price.

If you started your application with Covered California before the February 15th deadline then you have until Friday 20th to complete the formand not face a penalty. But if you do have to pay the fee and can’t afford it, you have the option to file a hardship exemption form.