Facts about your taxes & the Affordable Care Act

The Patient Protection and Affordable Care Act includes health insurance and tax law changes. Several measures of the Affordable Care Act, also known as Obamacare, have been implemented, but the most significant changes take effect in 2014 and 2015, including:

  • Individual mandate

    Requires most Americans to have health insurance starting on Jan. 1, 2014. Coverage can be obtained through employer-sponsored plans, government programs such as Medicare or Medicaid, private plans or through the new federal or state marketplaces, also called health insurance exchanges, that will be available Oct. 1, 2013.
  • Premium tax credits and financial assistance

    Available to qualifying individuals who don't have access to employer-provided coverage and purchase health insurance through a marketplace. Eligibility and amounts are based on the cost of marketplace premiums and your household size and income. The credit will be paid directly to the health insurance company to help cover monthly payments. If you elect to receive a lesser credit or no credit at all, you can claim the refundable credit on your 2014 tax return (due April 2015).
  • Tax penalty for uninsured

    If you don't have health insurance for a total of 3 or more months in 2014, you'll be subject to a penalty payable on your tax return due April 2015. The amount is based on the number of uninsured individuals in your household and household income.
  • Small business mandate

    Starting in 2015, small businesses with more than 50 full-time equivalent employees must offer health insurance or pay a tax penalty.

Changes impacting your 2013 tax return

View our Affordable Care Act & your taxes infographic

TaxACT 2013 will navigate all the ACA changes plus hundreds of other tax law changes for you. Here's how the ACA impacts federal tax returns due April 15, 2014:

  • Report health insurance premiums, flexible spending beyond payroll deductions, and other premiums paid by you and your employer. Simply enter the amount in Box 12-DD Box 12 with Code DD on your Form W-2 when prompted by TaxACT. The IRS requires it for information purposes only; it won't change your taxable income.
  • Increased threshold for deducting medical expenses. The threshold for the itemized deduction increases from 7.5% of Adjusted Gross Income (AGI) to 10%. The threshold remains at 7.5% for taxpayers and spouses who turn 65 during 2013-2016. TaxACT 2013 will calculate the deduction based on medical expenses entered.
  • 3.8 percent tax on net investment income. Individuals and heads of household with an AGI of $200,000+, married couples filing separately with an AGI of $125,000+, and couples filing jointly with an AGI of $250,000+ must pay the tax. Answer a few questions about investment income and TaxACT will do the rest.
  • Additional 0.9% Medicare tax on wages and compensation in excess of $200,000. Taxpayers in those same AGI ranges are subject to the additional Medicare tax. It's automatically withheld from employee wages, with the total amount provided in Box 6 of Form W-2. TaxACT will calculate the tax for Business owners or self-employed using figures from Schedule SE.

What to do now

See how much the ACA and other tax law changes will impact your 2013 taxes with TaxACT Free Federal Edition. Start your return now, then prepare, print and e- file your federal return free after TaxACT is updated with final IRS forms in early January 2014.
Get TaxACT's free year-by-year guide to the ACA's impact on your taxes at www.healthcareact.com
Save digital copies of your tax documents, receipts, statements and forms with TaxACT DocVault, a free mobile app and website. At tax time, import your DocVault images into TaxACT Deluxe. Available on Google Play and iTunes.
If you don't have health insurance, learn about your options and online marketplaces, also called “exchanges”, at www.healthcare.gov.

The road ahead