After 32 years of IRS work — and more than $100 million in resolved tax debt — I've seen just about every version of the problem you're dealing with. I'm Darrin Mish, a tax attorney in Tampa. Here's what you should know.
The Affordable Care Act that requires Americans who do not enjoy job-based medical insurance to buy such insurance and receive a tax credit for doing so came into effect last year. So this year is the first year taxpayers are seeing how complying with the Act is affecting their tax refunds. So far, according to industry sources, some taxpayers have seen their refunds reduce while others have seen an increase in their refunds after taking up medical insurance and applying the tax credit given.
Some have seen their entire tax refund wiped out because they under-estimated their earnings and even owed more taxes after their submissions were evaluated. Others had an opposite experience. Their refunds actually went up compared to previous years due to the tax credit that comes with the Affordable Care Act.
H&R Block estimated that 52% of their customers who took up medical insurance and claimed their tax credit actually had to pay more taxes. The average repayment is $530. As a result, expected refunds fell by 17%. On the flip side, about 33% of their customers’ refunds increased by an average of $365 per person.
Read more about how your tax refund may be impacted by the Health Law (Affordable Care Act)
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