One of the topics we get the most questions on is the Affordable Care Act (Obamacare). Despite it's name, the act, which requires taxpayers to purchase health insurance or pay a penalty, has caused health costs to rise significantly.
President Trump made many promises to repeal Obamacare during his surprising run to the Oval Office, One of his first executive orders was to allow certain agencies the authority and discretion to roll back certain provisions of the ACA. While it it still unclear what that means for most agencies, we now have a clue as to how the IRS is interpreting this order.
The IRS issued a statement saying that as a result of Trump's executive order, they will not systematically reject tax returns where a taxpayer does not indicate their coverage status. What this means is that the IRS is trying to ease the burden on taxpayers during the filing of their return. It does NOT repeal Obamacare, nor does it repeal the taxpayers' requirement to maintain coverage. All it does is allow your return to be processed even if you do not indicate your coverage status. Obamacare cannot be repealed by an executive order. It must be an act of congress.
So what happens if you choose not to show your coverage on your 2016 tax return? While the IRS will accept your filing, you can expect to receive a notice asking you to verify your coverage.
In essence, the IRS's administrative change here does not relieve any real burden or provide any way to avoid the health care penalty. We still highly recommend reporting your coverage status on your return as you file. Give us a call with any questions!
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