The Affordable Care Act may affect your 2013 taxes but TaxACT can help.

Doctor and patients

The most significant implications of the Patient Protection and Affordable Care Act of 2010, also known as “Obamacare,” are just around the corner. In addition to having wide-ranging effects on health insurance in 2014 and 2015, the legislation also impacts income taxes.

“Though the Affordable Care Act has implications on income taxes, you can still act confidently when preparing your tax return with an online solution,” says TaxACT spokesperson Jessi Dolmage. “The question and answer interview will cover all the tax law changes.”

The health care act included several tax law changes for 2013 federal income tax returns due April 15, 2014:

  • Employees will report the total amount paid by them and their employer for health insurance premiums, flexible spending beyond payroll deductions and other premiums, on their returns. “The amount is needed for health insurance changes; it doesn't impact your taxable income,” explains Dolmage. “Simply enter the amount in Box 12 with Code DD on your Form W-2 when prompted by the tax program.”
  • If you itemize deductions, the threshold for deducting medical expenses increases to 10 percent of your adjusted gross income (AGI). The threshold for taxpayers age 65 and older remains at 7.5 percent. The tax software will calculate the deduction after you enter your medical expenses.
  • A 3.8 percent tax on net investment income will apply to taxpayers at higher income levels based on filing status. Individuals and heads of household with an AGI of $200,000 plus, married couples filing separately with an AGI of $125,000 plus, and couples filing jointly with an AGI of $250,000 plus must pay the tax. Answer a few questions about investment income and your tax program will do the rest.
  • Taxpayers in those same AGI ranges will also pay an additional 0.9 percent Medicare tax on wages and compensation in excess of $200,000. The tax is automatically withheld from employee wages, with the total amount provided in Box 6 of your Form W-2. If you're a business owner or self-employed, the tax is calculated using figures on your Schedule SE.

The health insurance requirement doesn't have tax implications for another year. If you have health insurance, your online tax solution will guide you through the simple process of reporting it on your 2014 tax return due April 2015. If you don't have health insurance for a total of three or more months in 2014, you may pay a penalty that's reported and calculated on your tax return. Tax programs will calculate the amount based on number of uninsured individuals in your household and household income.

Uninsured individuals can shop and apply for health insurance through online “marketplaces,” also called “exchanges,” starting Oct. 1. States will have their own marketplaces, use the federal government's Health Insurance Marketplace or a hybrid of the two. Enrollment closes March 31, 2014.

If you don't have access to minimum required employer-provided insurance and purchase insurance through a marketplace, you may qualify for an advanced premium tax credit applied directly to your monthly premiums. Eligibility and amount are based on the cost of marketplace premiums and your household size and income. If you do not take advantage of the advanced premium tax credit, you can still claim the refundable credit on your 2014 tax return. Cost-sharing subsidies may also be available for other health care expenses such as deductibles, copayments and coinsurance.

Whether you have a simple or complex situation, TaxACT makes it easy to navigate the tax implications of the Affordable Care Act anytime, anywhere. Prepare, print and e-file your federal taxes free at Visit the Health Insurance Marketplace for information about insurance options at

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Upcoming Tax Dates

October 13 Employees who work for tips
If you received $20 or more in tips during September, report them to your employer - Details

October 13 Everyone
Federal Holiday (Columbus Day) - Details

October 13 Communications and air transportation taxes under the alternative method (special September deposit rule).
Deposit the tax included in amounts billed or tickets sold during the period beginning September 12 and ending September 15.

October 14 Regular method taxes (special September deposit rule).
Deposit the tax for the last 4 days of September.

October 15 Individuals
If you have an automatic 6-month extension to file your income tax return for 2014, file Form 1040, 1040A, or 1040EZ and pay any tax, interest, and penalties due - Details

October 15 Partnerships
Electing large partnerships: File a 2014 calendar year return (Form 1065-B). This due date applies only if you were given an additional 6-month extension - Details

October 15 Social security, Medicare, and withheld income tax
If the monthly deposit rule applies, deposit the tax for payments in September.

October 15 Nonpayroll withholding
If the monthly deposit rule applies, deposit the tax for payments in September.

October 27 Communications and air transportation taxes under the alternative method.
Deposit the tax included in amounts billed or tickets sold during the last 15 days of September.

October 29 Regular method taxes
Deposit the tax for the first 15 days in October.

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