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Key Tax Changes for 2014

Obamacare tax subsidy – individuals who purchase health insurance through the Exchange and are eligible based on income may receive a subsidy. This subsidy is calculated based on projected household income. Once the monthly amount is determined, it will either be paid directly to the insurance company or the taxpayer can pay the full premium and claim the subsidy as a tax credit on his tax return. Either way, a reconciliation will be done on the tax return once the actual household income is determined.

Tax penalty for not purchasing health insurance – Insurance companies or employers have to provide documentation of health insurance coverage. If the individual does not have proof of coverage, the penalty imposed for the 2014 tax year is the greater of $95 or 1% of income. This penalty amount increases annually.