With millions of Americans preparing to file their tax returns in advance of the April 15 deadline, many are discovering that key provisions of the Affordable Care Act (ACA) are impacting their liabilities more than they anticipated.

This can lead to unpleasant surprises for the unwary who may have been expecting a much larger refund than they will ultimately receive. Due to the confusion and uncertainty resulting from the health care overhaul, the upcoming tax season promises to be among the most complicated in recent memory, according to IRS Commissioner John Koskinen. The Maryland tax lawyers at Rosenberg Martin Greenberg stand prepared to help taxpayers assess their individual situation and achieve full compliance with the law.

Tax preparers bracing for questions

This tax season marks the first in which a taxpayer’s health care coverage, or lack thereof, will have an impact on his or her filing scenario. Individuals who receive health insurance through their employer will have little difficulty complying with the requirements of the ACA. Such taxpayers will simply certify that they did indeed have such health coverage for the entirety of the previous year. However, for the roughly 25-30 million individuals who lacked health insurance for that period or purchased subsidized policies on the exchanges, matters will be a bit more involved.

According to some tax professionals, many prospective filers believe that the penalty for not having purchased health insurance is a mere $95, a manageable amount for most. However, the fact is that the penalty is actually $95 or 1 percent of income, whichever amount is greater. This misconception has already been leading to questions and confusion among those already working to complete their filings.

Next year, the penalty will be $325 or 2 percent of income, and in 2016, it will rise to $695 or 2.5 percent of income per uninsured adult in the household. Penalties for uninsured children will be half of those amounts, though the total household penalty is limited to three times the rate for adults, regardless of the number of uninsured children. Because many taxpayers are unaware of these thresholds, they are caught by surprise when their expected refunds are noticeably smaller, and tax preparers are often the ones to break the bad news.

Some taxpayers facing subsidy repayment requirements

An additional complication for taxpayers stemming from the ACA is the fact that some will be required to repay health insurance subsidies received over the course of the year that have ultimately been determined to be too generous. This can occur when a taxpayer ends up making more money than they originally estimated, and thus will have received subsidies too large for their final income level. This can be a shock to many and can make a big difference in their expected tax liability for the year. Those caught unprepared may find themselves saddled with a debt obligation or other negative consequence that requires the help of an experienced tax professional to unwind.

Rush to secure compliance for 2015

Considering that the deadline to apply for insurance on the exchange for 2015 is February 15, many taxpayers will receive the unwelcome news that not only will they be liable for penalties for the prior year, they have also missed the opportunity to rectify the situation for next year’s filing. However, a number of exemptions exist, including dispensations for financial hardship, which may help some taxpayers sidestep the mandate to purchase a policy. An experienced tax professional can help untangle the law’s requirements and determine whether such exemptions apply in a particular case.

How a Maryland tax lawyer can help

The consequences for noncompliance with IRS regulations can be steep and may include audits and the assessment of costly penalties and interest. If you are feeling uncertain about your responsibilities under the ACA or simply need tax audit help related to other concerns, the professionals at Rosenberg Martin Greenberg are ready to help. Our team will conduct a comprehensive assessment of your personal or business circumstances and determine the best way for you to remain in full compliance with the law.

To schedule a consultation with one of our seasoned Baltimore-based tax attorneys, contact Brian Crepeau at 410.649.4981 orĀ emailĀ bcrepeau@rosenbergmartin.com.