As most Americans prepare to file their 2014 tax returns, a big question looming over our collective heads is: will the Affordable Care Act (ACA) tax provisions affect our individual returns? For many of us, the answer is Yes.

The law requires that all U.S. citizens living in the U.S., all permanent residents of the U.S. and foreign nationals who qualify as U.S. residents must have minimum essential health insurance coverage or make an “individual shared responsibility” payment when they file their 2014 tax return.

If you purchased your health insurance for 2014 through one of the health insurance marketplaces, you were required to estimate your household income for 2014. Based on your estimate, you may have qualified for a premium tax credit. Once you qualified for the credit, you then had to choose if you wanted the credit sent monthly to your health insurance company to offset your out-of-pocket cost, or to receive it as a refundable credit on your 2014 tax return.

All taxpayers who qualified for a premium tax credit will need to reconcile their actual income for 2014 with their estimated income used to qualify for the credit. If your income estimate was greater than your actual income and you received the advanced credit, your premium credit will be greater than what you received. Hence, your 2014 tax refund will increase or your tax due will decrease.

If the opposite is true – meaning your actual household income is greater than what you estimated – you will need to repay the excess credit. This situation will reduce any refund due to you. If your refund is less than the premium credit repayment or you won’t be getting a refund, the IRS will track the amount you owe and deduct it from your refunds in future years.

It is important to note that the income used to calculate the premium tax credit is household income. This may or may not be the same as the income on your tax return. For example, if you are married and have minor children with no income, your household income will just include the income of the two spouses. On the other hand, if your teen-ager has a job, that income has to be included in your household income.

What happens if you didn’t have health insurance in 2014? Unless you qualify for one of the exemptions, you will be required to make a “shared responsibility payment.” This payment due will decrease your refund. Again, if your refund is less than the shared responsibility payment amount due or you won’t be receiving a refund, the IRS will track the amount you owe and deduct it from your future refunds. The amount of the shared responsibility payment is a function of the number of people in your family and the number of months you were without health insurance.

If you have additional questions, contact your tax preparer or Crystal Financial Solutions. More information is available at

Judith Ackland has more than 26 years of experience in accountancy and financial planning, including seventeen years as a CFO of a diverse business. She started Crystal Financial in 2010 to help a wide array of individuals, families, and business owners better understand their finances and how good financial management could help them achieve their goals. Judith has an MA in Professional Accountancy from the University of Nebraska at Lincoln as well as a Certified Public Accountant Certificate and a Certified Financial Planner designation.

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