For the first time, a majority of taxpayers will have to check a box on their tax return attesting they have health insurance either through their job or Medicare or Medicaid.
But what happens if they miss it, which can easily happen on the complex form?
The Internal Revenue Service told the Washington Examiner it will not penalize anyone who has insurance but neglected to check the box.
However, a taxpayer may be asked by the agency if they have health insurance if their return is flagged during a routine check.
“The IRS routinely follows-up on the accuracy and completeness of tax returns, and in this situation, taxpayers should be prepared to respond to correspondence,” said Ubon Mendie, a spokesman for the IRS.
He added that taxpayers who already filed their returns don’t need to amend the returns solely to indicate they neglected to check the box.
The clarification is an example of how much of the country will be affected by Obamacare this tax season.
Obamacare customers will have to fill out new forms detailing the plans they selected and how much they will receive in tax credits.
The Obama administration is also making a fervent, last-minute push to warn taxpayers about the pending Obamacare penalty.
The Treasury Department released a slew of educational materials on Friday detailing the various exemptions an uninsured taxpayer can use to avoid the law’s individual mandate penalty for not having insurance. The action comes as a host of surveys and other data show that some uninsured people still don’t know about the penalty, let alone the more than 20 exemptions.
The penalty went into effect last year, but taxpayers will pay for it in their 2014 tax returns due on April 15. The administration has previously estimated that up to 4 percent of taxpayers will have to pay a penalty.
The Treasury is also working with tax preparers such as H&R Block and Jackson Hewitt to address the penalty, spokesperson Erin Dolan told the Washington Examiner.
Recent surveys show that Treasury’s promotions are desperately needed. A recent survey from the consulting firm McKinsey & Co. showed that of the uninsured people questioned, 41 percent don’t know about the penalty.
The survey of 3,000 people found that among those who knew about the penalty, nearly a third will pay it because they don’t need health insurance and the penalty will be less expensive than getting coverage. Nearly 1 person in 6 doesn’t want to get insurance because they don’t believe in the law.
The Treasury Department has estimated that a majority of those eligible for the penalty are also eligible for an exemption.
The exemption is available for those who can’t afford health insurance or live in one of the 19 states that didn’t expand Medicaid.
There are other hardship exemptions such as losing a close family member, experiencing domestic violence, or having substantial debt due to medical bills, Treasury said.
To claim an exemption, the taxpayer needs to mark the appropriate place on their tax return. They could also go through healthcare.gov.
Obamacare’s 2014 mandate penalty is $95 per person or one percent of household income, whichever amount is higher. In 2015, it jumps to $325 or two percent of income.
The administration is already holding a special enrollment period until April 30 for taxpayers who must pay the 2014 penalty so they can avoid this year’s penalty. Administration officials have not disclosed how many people have enrolled so far.
