|One of the selling points of the Affordable Care Act was that it would be "affordable", but the question of affordability is a complicated.|
There is a lot of information circulating about the Affordable Care Act (ACA), and the more difficult to understand what the tax implications are...? Started in 2014 there were 2 important tax implications of the ACA:
- You can choose to take an advance payment of the advanced credit based on your estimated income and family size for the year. An equal portion of the estimated credit is paid directly to the insurance company each month during the tax year. When tax time comes around and you file your return, you must compare the prepaid credit against the actual credit allowed. If the there is a difference in the prepayments and the actual credit (i.e. if your income or family size is different than what you expected at the beginning of the year), you could be owed more premium tax credit, which would increase your refund. However, you could also be required to repay to the IRS the amount of any excess prepaid credit. In other words, if you do not use all of your credit, you may get more back when you file your tax return. Alternatively, if you take too much credit during the year to pay for your health insurance premiums, you may owe money back to the IRS when you file your tax return.
- You can also choose to pay your premiums out-of-pocket each month and collect the full credit when you file your taxes.