Half of Obamacare subsidy recipients may owe refunds to the IRS
By Justin Green
January 2, 2015 | 11:37 am - The Washington Examiner
As many as 3.4 million people who received Obamacare subsidies may owe
refunds to the federal government, according to an estimate by a tax preparation
firm.
H&R Block is estimating that as many as half of the 6.8 million people
who received insurance premium subsidies under the Affordable Care Act benefited
from subsidies that were too large, the Wall Street Journal reported Thursday.
gThe ACA is going to result in more confusion for existing clients, and many
taxpayers may well be very disappointed by getting less money and possibly even
owing money," the president of a tax preparation and education school told the
Journal.
While the Affordable Care Act fines those who don't have health insurance, it
also provides subsidies for people making up to four times the federal poverty
line ($46,680).
But the subsidies are based on past tax returns, so many people may be
receiving too much, according to Vanderbilt University assistant professor John
Graves, who projects the average subsidy is $208 too high, the Journal
reports.
Tax preparers, who frequently advertise their ability to deliver big refunds,
have been working feverishly to avoid customer anger stemming from
lower-than-expected refunds due to insurance premiums. They also are trying to
make sure customers understand the potential fines for not having insurance.
"Eighty-five percent of our customers get a refund," said Kathy Pickering,
who directs the H&R Block Tax Institute, according to the Washington Post. "That refund could be offset by the
penalty. And if that happens, they're going to be understandably angry."
The fine for not having insurance in the second year of Obamacare is $325 or
2 percent of taxable income, whichever is greater.
But the IRS is also working on a budget that limits its ability to
aggressively enforce reporting on insurance.
gAs always, taxpayers are responsible for the accuracy of the information on
the tax returns that they sign," an IRS spokesman told the
Journal.