America’s largest tax preparation service has said what so many have already known.
Obamacare is going to be a nightmare for tax returns.
“Now that the Affordable Care Act has made health care a tax issue, no one can understand it,” H&R Block announced in a video posted on its website.
In a report on the newsroom section of the site, Kathy Pickering, executive director of The Tax Institute at H&R Block, said that tax payers may be in for some big, unpleasant surprises this year.
“Many may get a smaller refund because they had to pay a penalty for being uninsured,” she said.
“Or, the refund is smaller because they had to pay back some of the Advance Premium Tax Credit. The tax credit they received was based on estimated income, so if they actually earned more money, they may have to pay back some of the tax credit out of their refund.”
She also debunked one of the myths surrounding Obamacare’s effect on taxes.
“We’ve been checking in with consumers about the ACA for the past couple of years. One of the biggest myths we’ve found is that the penalty for not meeting the insurance requirement is only $95,” Pickering said.
“The reality is that the penalty varies depending on each person’s situation, and consumers may find themselves paying a higher penalty that is up to 1 percent of their annual household income and would come straight out of their tax refund. That could be a difference of hundreds of dollars.”
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