Obamacare Premium Tax Credit - IRS Reminds Individuals to Prepare for Penalties

The IRS published Fact Sheet 2014-09 in November with details on the key provisions of the Affordable Care Act (ACA) affecting individuals on their 2014 tax returns.

The main takeaway is that individuals that did not have health insurance coverage for the full year in 2014 must either apply for an exemption or pay a penalty, affectionately being referred to as a "shared responsibility payment."

That penalty can be steeper than you think; for 2014, it can be 1.0% of your income, and beginning on January 1, 2015, that rate jumps to 2.5% of income. So, let's say you file your 2014 tax return in March of 2015. By the time you realize what your 2014 penalty is, you will have already accrued three months of penalty for 2015. Not to mention that by March, open enrollment on the government sponsored marketplace will be closed and you will not be eligible for the credit subsidy!

Check out the entire IRS Fact Sheet here.