MYRTLE BEACH, SC (WMBF) - Do you have health insurance? How your answer could determine if you receive a tax refund when you file your tax return this year. One Myrtle Beach tax preparer said customers were shocked to hear their refund will be less or non-existent because they didn't sign up for insurance.
Samantha Slapnik, owner of Liberty Tax in Carolina Forest said business has been non-stop. "We are in gear, we are in full speed. We did over 50 returns yesterday," said Slapnik.
She added many people are surprised about the Affordable Care Act affecting their tax returns. "We've had a couple of customers come in where they have been close to the line if they were getting a refund or not and that penalty just swung them right into the red," explained Slapnik.
The big thing is you have choices, you can have health coverage all year, you can pay the penalty, or you can qualify for an exemption.
Slapnik said, "They are looking at pretty big penalties for 2016, if you are not covered, you are facing a $695 minimum penalty per person on your tax return."
Liberty Tax in Carolina Forest said they have to educate the customers that come through their doors. Some don't understand they have to sign up for insurance coverage within a certain time frame or face those penalties.
"It's a prorated penalty, so it's not the full $695 and that's the minimum, it's $695 or two percent of your household income, so depending on how much income you make, it could be much more than $695 per person.
Slapnik said if you have to pay the penalty, and you have a refund it will be paid out of that, and it you already owe, of course, you will owe more.
The tax preparer said customers should make sure they have the right documentation, she said the IRS will determine what kind of health coverage you obtained. "There are new forms this year, the 1095 A will go to all customers who purchased insurance through the marketplace. 1095 B comes from their insurance carrier, you may also receive a 1095 C, which is verification of coverage through their employer," Slapnik said.
There are a few ways you can avoid the penalties. "There is a long list of exemptions, it could be based on income, it could be based on hardships, like domestic violence or homelessness, or medical bills building up from over the past couple of years," said Slapnik. "You could also be part of a religious institution that does not believe in health insurance, there is a long list of them (exemptions) and you may have to apply for them through the Department of Health and Human Services or file them on your tax return, it depends on which one you qualify for."
Slapnik also added there is a misconception that insurance enrollment is always available, but she says that is not the case. "Some people still think they can go out and get insurance anytime they want and that is not the case anymore," said Slapnik. "They can only get health insurance during open enrollment which ended on January 31, so now if they did not do that they are currently out of luck for the rest of the year, unless they qualify for a special enrollment period which could be a change in circumstance, like getting married or divorce, adding a dependent or losing one, those kind of things."
Another exemption includes a 60 days or less of coverage, which means if you did not have health insurance coverage for 60 days or less you will not penalized.