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Tax, Bankruptcy, Business, Divorce

Tax Returns and Health Insurance

President Trump has issued an executive order that directs the government to provide relief from Obamacare to individuals and insurers.  The executive order directs federal agencies to exercise authority and discretion available to them to reduce potential burdens.  For its part, the IRS has decided to accept returns that haven't indicated whether taxpayers and their family members are covered by qualifying health insurance or not.  This allows taxpayers to decline to answer the question on line 61 of IRS Form 1040, yet have their return accepted and processed. 

Obamacare requires everyone to either maintain qualifying health coverage or pay a tax penalty,  known as a "shared responsibility payment."  The individual shared responsibility provision requires you, your spouse and your dependents to have qualifying health insurance for the entire year, report a health coverage exemption, or make a payment when you file.

The IRS was prepared to require tax filers to indicate on line 61 whether they and their family had health coverage during 2016.  If not, taxpayers are subject to a penalty.  Now it appears, due to President Trump, that filing out line 61 is optional.

The law requiring taxpayers to pay a tax if they and/or family members are not covered by qualifying health insurance is still the law.  The penalties have not been waived.  The IRS may enforce the law in the future; we don't know what will happen with Obamacare or with the direction of future elections.  This year, the IRS is merely turning a blind eye by accepting forms that don't provide the requested information on line 61.  The future remains uncertain.

Bowman Law Firm

Gene M. Bowman, Attorney at Law