In order to avoid Obamacare tax penalty you are required to gain minimum essential coverage and preserve it all over the year or get an Obamacare exemptions. It is imperative to make sure that you and your dependents are covered during health plan open enrollment time.
The Affordable Care Act or the Obamacare requires that all citizens without a qualified exemption pay a penalty, called a shared responsibility payment. When tax is filed, if a penalty is due it is subtracted from refund. However if you qualify for one of the any exemptions, then penalty is not to be paid.
When you file, if a penalty is due, if will be deducted from your refund or added to your tax liability if no refund is due. However, if you qualify for one of the exemptions, you will not have to pay.
Some of the Obamacare exemptions:
- Income is below the federal filing threshold amount.
- Medical expenses are unable to be paid in the last 24 months.
- If a “shut off” notice is received from the utility company.
- Any damage to the home by fire, flood, or other natural disaster in the past year.
- Bankruptcy in the past six months
- Spent time in jail in past one year
- Suffered any domestic violence
- Homeless in last one year
- Family member died last year
- Determined unqualified for Medicaid in a state that did not encompass Medicaid coverage.
- Household income is below 138% of the federal poverty line