Having a health plan has always been a good idea, but the Affordable Care Act (ACA) made it a requirement, and unlike on the 2016 tax returns, in 2017, the IRS will not accept 'silent returns' (tax returns where the taxpayer does not address the health coverage requirements of the ACA.
If you didn't have a health plan (with minimum essential coverage) in 2017, you will pay a penalty when you file your taxes. The penalty is either 2.5 percent of your household income or a flat fee per person, whichever is greater, according to HealthCare.gov. But there are some exceptions to this rule.
Income and Hardship-Related Exemptions
If the lowest-price coverage available to you costs more than 8.13 percent of your household income
If your income is not high enough for you to file a tax return
If you had a financial hardship that prevented you from buying insurance
Hardship exemptions include homelessness, bankruptcy, or steep increases in medical expenses for an aging parent in your care. If you were facing eviction or foreclosure, were a victim of domestic violence, or experienced the death of a family member, you may also qualify. You must apply for a hardship exemption, and if you qualify, you don’t pay a penalty for the months you were uncovered.
Health Coverage-Related Exemptions
You were uninsured for no more than two months in a row
You lived in a state that didn’t expand its Medicaid program, and meet certain income requirements
Group Membership Exemptions
You’re part of a federally recognized tribe
You’re an American Indian, Alaska Native, or are eligible for services from the Indian Health Service
You’re part of a health care sharing ministry
You’re a member of a religious group that is opposed to accepting insurance benefits
Other Possible Exemptions
You’re not a U.S. citizen and meet certain requirements
You’re a U.S. citizen but you spent 330 days of the year living abroad, or you claimed residency in another country
If you were in prison, even for a day, you can claim an exemption for the month
If you qualify for any of the health insurance penalty exemptions listed above, you can claim an additional exemption if someone in your household was born, adopted, or died during the tax year.
While we are, of course, available to provide you with any business, accounting or tax services, the information contained herein is general in nature; any advice regarding those services should not be construed as tax advice and is not intended as a thorough, in-depth analysis of specific issues, a substitute for a legal, accounting or tax advice or opinion, nor is it sufficient to avoid tax-related penalties to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader's specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. The reader should contact Strive Tax & Accounting, LLC or other tax professional prior to taking any action based upon this information. Strive Tax & Accounting, LLC assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.