You pay a fine if your spouse and kids are uninsured.
If you claim dependents on your tax return, you’re responsible for paying the mandate fines if your dependents don’t have health insurance.
This provision takes on special importance because of its interaction with Obamacare’s employer mandate. Under the health law, employers with more than 50 full-time-equivalent workers are required to offer health coverage to their employees and employees’ dependents under the age of 26. Employers are not required to offer coverage to employees’ spouses. Hence, a worker who gets coverage through his job will be forced, under the individual mandate, to purchase coverage on his own for his spouse, if he or she doesn’t have other sources of coverage. A worker who doesn’t get coverage through his job will need to purchase coverage not only for himself, but also his dependents.
But all is not lost:
The IRS can’t go after you if you don’t pay the fine.
Basically, the only thing the IRS can do to make you pay the mandate fine is to withhold it from your tax refund, if you’re due one. So if you carefully calibrate your withholdings, such that you aren’t due a refund at the end of the year, the IRS has no way to collect the mandate fine.
That is, until you overpay some year, or they change the rules.
Related: Health Care Act And The Road To Good Intentions A guest post by Scott Lovingood at TaxGrrrl’s place.
TaxProf, Seventh Circuit Joins Majority of Circuits in Upholding Valuation Misstatement Penalties in DAD Tax Shelter. The “distressed asset debt” shelter would purportedly allow people who needed tax losses to get them by acquiring interests in partnerships with worthless South American consumer debt, using pretend basis from notes. Judge Posner found it unconvincing:
The intention was simply to create the appearance that the investors’ interest in the partnership had a high enough basis to enable the entire built-in loss that the shelter investors had acquired to be offset against their taxable income. But all this means is that the investors should not have been permitted to deduct their entire built-in loss — yet in fact they shouldn’t have been permitted to deduct any part of it, because the partnership was a sham.
The DADs were among the least plausible of the mass-marketed shelters, and that’s saying something.
Phil Hodgen, Green card received in 2007? Expatriate in 2013 or else. Give us your huddled masses. We’ll fix them!
Sometimes the author and the story are made for one another. Roche: Taxation of Medical Marijuana Businesses (TaxProf). The story explains why the tax law isn’t kind to these folks:
Section 280E represents a departure from the longstanding practice of generally taxing illegal businesses in the same manner as legal businesses and effectively causes medical marijuana businesses to be taxed on their gross income rather than their net income. Medical marijuana businesses are, however, allowed to reduce their gross revenue by cost of goods sold in arriving at gross income. This puts medical marijuana businesses in the unusual position of wanting to capitalize as many of their otherwise deductible expenses to inventory as possible, unlike most businesses, which would prefer a current deduction.
It would be interesting to see an IRS exam where they want you to capitalize less to inventory.
Paul Neiffer, What’s my tax on selling equipment? If it’s a gain, usually it’s ordinary income.
William Perez, 2012 Corporate Returns Due September 16. Also, extended 1041s and 1065s.
Bounty hunting in Pennsylvania? Philadelphia’s Use of Contingent Fee Auditors (Cara Griffith, Tax Analysts Blog)
What this country needs… What We Need Is a Godless Tax Code! (Christopher Bergin, Tax Analysts Blog) Doesn’t Satanic count?
Peter Reilly, Tea Party Patriots Inc And IRS – Who Is Being Unreasonable ? Peter seems to think that the IRS wasn’t clearly unreasonable in holding up Tea Party applications. I think he misses the point — the whole process was one-sided. Only right-side groups got the IRS slow-walk, while “progressive” applications skated through;
Peter is right, though, when he says “We Really Should Not Have Accountants Trying To Figure This Stuff Out.” John Kass explains how this stuff works in IRS scandal a reminder of how I learned about The Chicago Way
Career Advice: Would I Recommend the Tax Prep Industry to a Young Person? Probably Not (Jason Dinesen:
Going Concern, Let’s Play Another Round of Accountant/Not an Accountant! I found the first one too frightening to continue.
Finally – if you think you’ve had a bad day at the office, it could have been worse: