It’s that time of year again when we either sit down with calculators, pencils, paperwork, and a bottle of Advil® or take a manila envelope to someone else who gets paid to prepare the cumbersome, and sometimes utterly insane, federal and state (if applied) income tax forms. It’s a task that everyone wishes could be done away with, no matter if it’s the person having their taxes done or the person taking their time to prepare them.
Preparing taxes can be easy if you know what you are doing. It is not difficult if you can make heads or tails out of all the gibberish in a tax guide or a Publication 17. Thankfully, I had to take two tax courses before I could get my associates in Accounting. Thankfully, before I became employed where I prepare taxes, I had to take a course that was basically a college course as it was ten weeks long and I had to attend it three days a week. If you have a chance to take a course, do it. You will pay for that course many times over. We, in the tax preparation industry, look at people doing their own taxes as unnatural…like people who do their own hair! Thanks for that, Truvy.
If I could give any advice for this tax season, I would say to ask your tax professional about the upcoming Health Care Reform Act and its effects on your taxes. If you are employed and you have health insurance through your employer, or you are self-employed and you are paying your own health insurance premiums, you are fine…if you continue to do that. In 2014, the HCRA will take effect and each individual US citizen will be expected to be covered under a health insurance plan. Some states will have exchanges while others will not. There will be subsidies provided to families that are considered below poverty level by the Department of Health and Human Services. At this time, I would say that no one, other than people at the IRS, knows exactly how this all works. I have been introduced to a few details but only enough that will help lead people to make decisions concerning their tax situation. A few are:
- Information from your 2012 tax return will be used by health insurance exchanges if you apply for health insurance with an exchange.
- Depending on your income, household size, and other things, you may qualify for assistance (subsidy) to help pay PART of the cost of your insurance premiums.
- If you do not get health insurance, you may be subject to a tax penalty. The penalty formula is complicated, but it would be per person in the household.
I am by far not a Health Care Reform Act guru or scholar, but this is something that can be understood. It might not be agreed with, but this will be the law starting in 2014. The highest court in the land has deemed it constitutional. There was a lawsuit filed and heard by the Supreme Court. The cost of the health insurance penalties was seen by some as being an unfair taxation, but instead of a tax, it was given another designation. Either way, it is something each citizen and lawful resident will have to abide by.
As I learn more through the tax season, I will be sharing it on this blog. I am a believer in sharing knowledge with all people. No one group of people should be allowed to withhold information that will affect the lives of others.