1. The Obamacare Penalty. When the US Congress passed the law last year, it was clear that non-exempt individuals who do not meet the requirements for healthcare insurance will be penalized. Except for those who have been explicitly mentioned in the law as exempted, all individuals not covered by an approved plan will be penalized.
The penalty will all depend on the individual’s income. Penalty will be $95, or 1% of the taxable income in excess of the tax threshold, whichever is higher. It should be noted that this penalty is lower than a healthcare plan.
2. The Obamacare Credit. Individuals who would opt to enroll in a healthcare exchange in 2014 will be granted a tax break. The incentive is intended for people who will find it difficult to pay for an insurance coverage under the Obamacare.
It is understood under the Obamacare law that all employees whose incomes fall under the range of the poverty level cannot afford a healthcare plan. They are eligible for credit, which may availed from their employers. The credit may be directly applied to an insurance premium, or applied as a lump sum amount to the 2014 tax return.
3. The Flex Spending Account (FSA) Roll-Over Allowance. All employees who have been provided with an FSA option by their employers can roll-over their flex funds by up to $500 to the succeeding year or use the amount until March 15.
These changes in the healthcare tax legislations will surely affect the 2014 tax returns. Make the necessary decision now to avoid penalties next year.