A week or so ago I received an e-mail from a client saying two employees who previously had tax refunds in prior years had not much refunded when filing their 2014 return and wondered why. As a payroll processing company, we don’t know their situations , so it isn’t a question I can easily answer. More than the earnings on a paycheck can affect a person’s taxes.
My response was that tax deductions are determined by how much is earned and how the employee claims on their W4 as well as other changes such as no longer having deductions that were previously available (child tax credit, education credits, and such). But I also asked if the employees had medical insurance. If not, they had to pay the individual shared responsibility payment for the Affordable Care Act. This tax was implemented in 2014, so if they failed to have coverage, they had to pay a fee.
Many individuals or families may be surprised when they owe more tax, or receive less of a refund than in the past. To avoid this amount due on your tax return, you must have minimal essential coverage. February 15th was the enrollment deadline for 2015, so unless you have a reason why you can enroll now (marriage, child, job change, etc) this tax will also be due on the 2015 tax return.
If you have questions about this tax or need help with understanding the Affordable Care Act, talk with a professional in this field. Many individuals didn’t realize the impact the Affordable Care Act would have on their refunds, and this effect is starting to be seen.
I hate to be the bearer of bad news when it comes to additional taxes, but by my sharing this information, at least you can be informed and know what to expect come tax time.