How Much Are The Obamacare Tax Penalties?

A common question we hear in our Customer Care Center is, "How much are the tax penalties for not having health insurance and when do they apply?" The tax penalties go into effect in 2014, which means if you're uninsured for more than three months in 2014, you may incur the tax penalty and that penalty would be applied when you file your 2014 income tax return. If you don't qualify for an exemption, the Affordable Care Act's mandate to purchase qualifying health coverage, then you will be subject to a tax penalty. The penalty is phased in over a three year period. In 2014, the penalty will be the greater of one percent of taxable income. Or $95 per adult and $47.50 per child, up to $285 per family. In 2015, the penalty will be the greater of 2 percent of taxable income, or $325 per adult and $162.50 per child, up to $975 per family. In 2016, the penalty will be at the greater of 2 and a half percent of taxable income, or $695 per adult and $347.50 per child, up to $2,085 per family. After 2016, the penalty will be increased annually by the increase to the cost of living. Households with incomes above 400 percent of federal poverty level, will be exempt from paying tax penalties if insurance in their area costs more than 8 percent of their taxable income, after taking into account employer contribution or tax credits. People will be able to apply for exemptions to the tax penalties if- 1. They have financial hardships. 2. Religious objections. 3. If they're an American Indian. 4. If they're uninsured for less than three months. 5. If they're an undocumented immigrant. 6. If they're incarcerated. And if you have questions, you can always give us a call.