President Trump issued an Executive Order on February 6th to prevent the IRS from rejecting any tax returns that do not have line 61, on the 1040 form, checked. Prior to February 6th, if you did not check line 61 then you were not able to file your Federal tax return.
What is line 61 on your 1040? Line 61 is labeled as Health Care: Individual Responsibility. You are telling the IRS if you had health insurance coverage in the prior year, either through your employer or through the Federal Exchange. You will receive a form from the insurer or your employer showing you had coverage. That form is called a 1095.
What are the penalties if you did have health insurance?
The fee is calculated 2 different ways – as a percentage of your household income, and per person. You will pay whichever is higher.
- Percentage of income. It is 5% of taxable household income. Maximum Penalty: Total yearly premium for the national average price of a Bronze plan sold through the Marketplace
- Per person. $695 per adult and $347.50 per child under 18. Maximum: $2,085
The Affordable Care Act was not repealed so the penalties still apply. The Executive Order does not waive the penalty in any manner. The President’s Executive Order only allows you to file the return and the IRS to process the return, without checking line 61 of the 1040 form. The IRS can and probably will contact you for proof of insurance in the near future. If you did not have insurance then the IRS will penalize you and collect the funds. If you do not send them the money, then they will take it from your future Federal Tax Return. The media has typically only reported that you do not have to check line 61 and has not reported about the tax consequences. Be very cautious and speak with your tax preparer.
Additional information can be found here:
https://taxpayeradvocate.irs.gov/estimator/isrp/
https://www.healthcare.gov/fees/fee-for-not-being-covered/
| Author Gianni Franco | 