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Refunds for 2017 Shared Responsibility Payments

A new, or little known exception has recently been made clear that could allow you to recover 2017 penalty taxes. If you were one of the many taxpayers without Minimum Essential Coverage (Health insurance) for 2017, you might have paid a penalty tax with your 2017 tax return. Now, you could qualify for a full refund of those taxes!

Health Care: Individual Responsibility

For 2017, individuals must have health care coverage, qualify for a health coverage exemption, or make a shared responsibility payment. There are a number of automatic coverage exemptions. If qualifying for one of them, an individual may be exempt from the requirement to maintain minimum essential coverage and thus will not have to make a shared responsibility payment. Automatic coverage exemptions include:

  • No affordable coverage option
  • A gap in coverage for less than three consecutive months
  • Qualifies for one of the other reasons including certain hardships or belonging to certain exempt groups
  • Other coverage exemptions as provided

In addition to automatic exemptions from coverage, individuals are also permitted to request coverage exemptions from the Marketplace.

The Marketplace has the authority to grant exemptions from coverage for things like 1) Projected income appears to make insurance unaffordable, or 2) Members of a recognized religious sect, etc.

The Penalty Tax

For 2017, the Individual Shared Responsibility Payment was capped at $272 per individual per month, or $3,264 per individual for the year. For a family of five or more, this could amount to as much as $16,320 for the year!

The monthly shared responsibility payment amount for 2017 is the greater of (Subject to the caps above):

  1. 2.5% of the household income that is above the tax filing threshold for the Taxpayer’s filing status or
  2. $695 per adult + $347.50 per child, limited to a family maximum of $2,085.

The Good News

You might be wondering why I’m reciting all of this old information. What difference does it make? Well… you might not care very much about the information so far and you probably care even less about how the Shared Responsibility Payment was computed or what the limitations might have been. The two important things that you likely remember are 1) I did not have health insurance and 2) I had to pay a penalty tax on my 2017 tax return.

If you are one of the many individuals subject to the shared responsibility penalty tax for 2017, I now have something to share which WILL likely capture your attention. Recently, a little known, or unknown, exception from coverage has been made clear. This exception will allow MANY Taxpayers who paid this tax to now claim a refund. By claiming this new exception from coverage and filing an amended tax return, many Taxpayers will be able to perhaps recover thousands of dollars!

NEXT STEPS: If you paid a penalty tax on your 2017 tax return because you did not have minimum essential coverage, email to us the city and state of your 2017 residence and include in the subject “New 2017 Exception from Coverage”. We will send you some free information that pertains to the new exemption for your area.


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