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NetCPA's is a CPA firm concentrated on Xero based out of Breckenridge. Terry Power, CPA, is the principal. Terry focuses exclusively on providing Xero-based accounting solutions for small businesses.

He currently has Xero clients in Denver, Summit and Eagle Counties, with plans to expand to anywhere in the US a client needs Xero.    

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Feb 03

The "Un" Affordable Care Act and 2014 Tax Returns

Posted by Terrence Power, CPA at Tuesday, February 03, 2015

I attended a webinar last week on how the "Affordable Care Act" affects the filing of 2014 Federal income tax returns. 

The punch line is be prepared to pay more, a lot more, to have your taxes prepared this year if you either received a federal subsidy to help pay for your health insurance premiums, or if you chose not to purchase health insurance at all (you were uninsured in 2014, even if for only part of the year).

If you were uninsured, you should also be aware that you will be penalized for not having health insurance.  You will have to pay a penalty, in addition to your regular income tax, to the IRS.  This is a double whammy because first you likely can't afford the premiums and were uninsured and now you have to pay a penalty and tax prep fees on top of it all.  

The additional forms that will need to be completed are extremely complex and the information gathering process to complete the forms will be tedious, for the both the taxpayer and the accountant.  People who have never had to file returns in the past will now have to file if they received a subsidy.  Most people won't even have a clue as to what the effects the law are with respect to filing their returns for 2014.  I don't think anyone subject to the ACA will be able to use tax software to correctly prepare their returns.  And, on top of it all, both the taxpayers and the accountant are subject to stiff penalties for making a mistake.

I've read a number of articles (in Forbes and other news feeds) predicting that taxpayers will simply say "forget it" and ignore the additional filing requirements and subsequent penalties.  The ACA is a bad law, and bad laws that people won't obey eventually disappear.  Like the old saying goes, you can lead a horse to water but you can't make the horse drink.   

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