Affordable Care Act Tax Credit
Did you know that you may be eligible for an ObamaCare tax credit? Do you know how it is calculated? You might be surprised that the upper income limit is higher than many people expect.
The tax credit is essentially determined by your total household income. If your household income falls within a certain threshold, you will qualify for a tax credit.
Here’s a video of Jeff explaining exactly how it works:
How is the ObamaCare Tax Credit Calculated?
There are two forms that take into consideration the cost of insurance and the amount of credit that you have received. This information is used to determine whether you owe money or will receive money back on your tax return. These forms are Form 8962 and Form 8965.
If you decided not to take the premium tax credit as an advanced credit, you’ll get any remaining funds back on your tax return. If you received more credit than you were due, you will owe it back on your tax return. Without the guidance of a qualified tax professional, it can be confusing to know whether or not to take the advanced premium. Consult a qualified tax professional before making this decision.
How Should Married Couples File?
Married couples that take the advanced premium tax credit and then opt to file married separate (rather than married joint) will receive no premium tax credit and will therefore owe money back.
There are exceptions; if someone has been in an abusive relationship, he or she can file married separate without losing the premium tax credit. Absent a circumstance such as that, you really don’t want to file married separate if you have received the premium tax credit.
Need Some Answers About ObamaCare?
If you have questions about how ObamaCare and the premium tax credit will affect your tax return, talk to the tax professionals at Baker Retirement & Wealth Management. We’ve been serving the greater Evansville area for nearly thirty years and can provide the insight you need to understand your taxes. Our clients are based in Boonville, Owensboro, Henderson, Rockport, Newburgh, and beyond.
It’s an undeniable fact that your health insurance decisions impact your taxes – and vice versa. Call the Baker team to learn how to make an informed health insurance (and tax planning) decision.
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