The Affordable Care Act and Your 2015 Personal Income Tax Return

The Affordable Care Act requires every member of your tax household to have qualifying health care coverage for each month of the year, or pay an additional tax on your personal income tax return.  If every member of your household had coverage for all of 2015, you will simply check a box on your tax return to report that coverage.

However, if you don’t have qualifying health care coverage and you meet certain criteria, you might be eligible for an exemption from coverage. Most exemptions are can be claimed when you file your tax return, but some must be claimed through the Marketplace, well before filing your tax return.

If you or any of your dependents are exempt from the requirement to have health coverage, you will complete IRS Form 8965, Health Coverage Exemptions and submit it with your tax return. If, however, you are not required to file a tax return, you do not need to file a return solely to report your coverage or to claim an exemption.

For any months you or anyone on your return do not have coverage or qualify for a coverage exemption, you must make an additional tax payment called the individual shared responsibility payment. This additional tax is calculated separate from your income tax and may be due even if you have no income tax liability.

The IRS provides an online tool, the Interactive Tax Assistant on IRS.gov to help you determine if you are eligible for a coverage exemption or responsible for the Individual Shared Responsibility Payment.  If you need health coverage, visit HealthCare.gov to learn about health insurance options that are available for you and your family, how to purchase health insurance, and how you might qualify to get financial assistance with the cost of insurance.

Congress Passes “Extenders” Legislation Reviving Expired Tax Breaks For 2015

Many valuable tax breaks expired December 31, 2014. For them to be available for 2015, Congress had to pass legislation extending them — which it now has done, with the Protecting Americans from Tax Hikes Act of 2015 (PATH Act), signed into law by the President on December 18. The PATH Act not only revives expired breaks for 2015 but also makes many breaks permanent.

A few of the extended tax breaks that may benefit you or your business include:

  • Section 179 expensing is extended permanently with an annual limit of $500,000, indexed to inflation starting in 2016.
  • Bonus depreciation is extended through 2019.  Bonus depreciation provides a depreciation deduction equal to 50% of the cost of qualifying property in the first year it is placed in service.  Although this tax break is extended through 2019, it has reduced benefits for 2018 and 2019 and is completely phased out by 2020.
  • Accelerated depreciation options for qualified leasehold-improvement, restaurant and retail improvement property is extended permanently.
  • The option to deduct sales taxes in lieu of state and local income taxes is extended permanently. 
  • For teachers, the “above-the-line” deduction of up to $250 for school supplies is extended permanently, indexed for inflation in 2016.
  • Tax-free IRA distributions to charities is extended permanently.
  • The research tax credit is extended permanently.
  • The Work Opportunity credit is extended through 2019 and enhanced beginning in 2016.
  • Various energy-related tax incentives are extended through 2016.

Please contact us for more information on these and other breaks under the PATH Act.