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Tipsheet

The IRS Mess That Will See Obamacare Enrollees Owing More Taxes

A new study from a tax preparation firm has found that half of all beneficiaries of Obamacare subsidies for insurance may have had subsidies that were too large, and are going to end up with much larger payments to the IRS this year than they were expecting.

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As the Wall Street Journal reported:

As many as half of the roughly 6.8 million Americans who got subsidies may have to refund money to the government, based on one estimate by tax firm H&R Block Inc.

“The ACA is going to result in more confusion for existing clients and many taxpayers may well be very disappointed by getting less money and possibly even owing money,” said Charles McCabe, president of Peoples Income Tax and the Income Tax School, a Richmond, Va., provider of tax preparation and education. “The whole implementation of Obamacare will be frustrating for tax preparers.”

In addition to determining who has to pay a penalty, the accuracy of tax credits is likely to pose challenges. Because people often incorrectly estimate their future income, many Americans may have gotten subsidies—based on their own projections of 2014 income—that were too generous.

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For Obamacare enrollees whose subsidies are too high, the average that they may owe back to the IRS is $208, though as the WSJ reported, "some filers got subsidies that were too small and will get larger refunds."

Still - that half of Americans are going to end up owing hundreds of dollars back to the IRS because of "overpayments" for Obamacare subsidies might come as a surprise to those millions of people.

Hat tip: Justin Green.

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