As we put the finishing touches on 2014, many of us will start setting goals for the New Year. When it comes to tax matters, don’t forget about the costs of not having health insurance.

Starting in 2014, all nonexempt U.S. citizens and legal permanent residents must maintain minimum essential health-insurance coverage. This requirement is discussed in a recent Albuquerque Journal article titled “Tips help prep for improved finances.”

This requirement was part of the Patient Protection and Affordable Care Act, known commonly as “Obama Care.” If you don’t maintain the minimum essential health-insurance coverage it can mean a penalty by way of additional taxes. This penalty tax will start to be charged on 2014 individual income tax returns—those that are due before April 15, 2015. The IRS will assess the penalty based on the taxpayer’s income level.

According to the federal government’s website, healthcare.gov, individuals without health insurance coverage in 2014 will pay the higher of these two figures when filing their tax returns:

• One percent of their yearly household income. This will be calculated based on the amount above the tax-filing threshold, which is approximately $10,000 for an individual, but not in excess of the national average premium for a bronze-level health-insurance plan; or
• $95 per person and $47.50 for children under 18, not to exceed $285 per family.

These penalties are set to increase for individuals and families who are not covered in 2015.

For more information about estate planning, please visit my estate planning website.

Reference: Albuquerque Journal (December 28, 2014) “Tips help prep for improved finances”