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Old 11-05-2014, 03:23 PM
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What would be "tax penalty for not buying health insurance?"

According to the IRS, "the tax penalty is assessed by the IRS when individual tax returns are filed, on the basis of insurance verifications submitted by the taxpayer." As such, "the Affordable Care Act's, or ACA's, insurance" mandate imposes some new administrative burdens on individuals, employers and insurers around tax season.

Thus, from this point forward, health insurers or employers will have to provide individuals annually with documentation of their health insurance coverage during the year, which individuals will then file with their tax returns as proof of coverage.

IRS officials will then determine whether the type and duration of the individual's insurance coverage is adequate under the ACA.

Per the IRS,

1) "If coverage is adequate or the taxpayer is exempt from the insurance requirement, no penalty is assessed."

2) "If coverage is lacking or insufficient, the IRS will impose a tax penalty by reducing the taxpayer's refund.

The penalty for an individual starts at the greater of $95 or 1% of income in 2014, increases annually to $695 or 2.5% of income by 2016, and is subject to cost-of-living increases every year after that."

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