"We're really nervous for people," said Rob Justus, executive director at CASH Oregon, which provides free tax-preparation help for low-income Oregonians. "They could, more out of a desperate sort of guess, really screw themselves over. We're really fearful, especially with a lot of the folks we're working with who are in poverty."No word on if there will be penalties to pay for the taxes you owed not being paid on time. However, the helpful advice to avoid bad financial news is either to take no subsidy or less subsidy than you think you deserve. In other words, you would be wise to act as if ACA/Obamacare subsidies had never been passed.
Why the concern? Cover Oregon's mailing will provide your estimated Advanced Premium Tax Credit (APTC). For most taxpayers, it'll be based on the household income reported on your 2012 tax return, said Leslie Smith, Cover Oregon's online trainer.
But if the estimate you provided on your Cover Oregon application for your 2014 income is 10 percent higher or lower than your actual 2012 income, the exchange will rely on your 2014 estimate to calculate your credit, Smith said. The exchange will ask you to submit documentation within 90 days supporting your 2014 estimate, she said.
How do you protect yourself? If your income fluctuates a lot from year to year – as it might for Realtors or other self-employed individuals – you can hold off on receiving the credits until you file your 2014 return. That's rough, though, if you don't have enough monthly cash flow to cover the full insurance premium.A further suggestion is that the poor get a tax preparer to help--if one can be found.
You can also apply only a portion of your credit against your premium.
Still unclear? Who can help you decide how to apply the credit? That's a bit tougher. Insurance agents aren't licensed to give tax advice.How about charitable help? Problems there too. "CASH Oregon, which provides free assistance at 130 sites statewide, won't be up and running until January." Further, as quoted above, the CASH Oregon director is "fearful" of effects on the poor of claiming ACA/Obamacare subsidies.
. . .
Many tax advisers aren't up to speed on the act yet. If they are, and they bill by the hour, they don't want to charge individuals who largely can't afford to pay for the advice.
"Many preparers don't want to be involved in that because you have to bill out a lot of time for people who can't afford it," Baldwin[*] said. "Next year when you have to reconcile it, it's even more work. It's not going to be very pleasant."
And though H&R Block has a website to help estimate tax credits, it has information on less than half the plans available. Hunsberger found that instead of giving a choice of 80 plans from 10 providers that Cover Oregon gives, H&R Block gave a choice of only 33 plans from 2 providers--a 60% reduction in choice.
So, ACA/Obamacare is not only forcing people to buy medical coverage with bells and whistles they don't want, but making tax filing time so complex that even the poorest among us will need professional tax help to avoid "really screw[ing] themselves over" in receiving health care subsidies.
*From Hunsberger's article:
"I was astonished at what level of work they're going to expect people to do," said David Baldwin, an accountant and member of the American Institute of CPA's tax resource panel committee. "It's going to be hard to implement for someone who can't afford to pay someone to do their own taxes."