Based on data from H&R Block as we are halfway through filing season, it is apparent that compliance with the Obamacare penalty is still a difficult task.
This is the second year that the penalty has been levied; for 2014 taxes, the fee was $95 or 1 percent of qualified income — whichever was greater — and for 2015 taxes it is $325 or 2 percent of income, whichever is greater. The average penalty is $383, while last year it was $172, which corresponds roughly to the rise in penalty costs.
However, about 3/5, or 60% of filers “who received advanced tax credits to help them buy private plans on Obamacare’s web-based exchanges must pay a portion back to the IRS because they underestimated their actual income for 2015.” Interestingly, this is an increase from last year’s figure of 52% who had to repay a portion of their advanced subsidy. Thus, compliance and income estimation is getting worse, not better, after two tax seasons.
The average subsidy amount of that Obamacare enrollees must pay back has also increased slightly this year — $579, up from $530 last year.
In contrast, about 33% of taxpayers overstated their income and received additional subsidy funds from the IRS; the average amount was $450. Those that got the number correct and saw no adjustments was a paltry 3%.
The confusion is sure to continue with next year’s filing season. The minimum penalty for no insurance will double again to $695 or 2.5% of income, whichever is higher. H&R Block calculations show that for an average family of four earning $60,000 would pay $975 this tax season (2015), compared to about $400 last year (2014), while next year the penalty would rise to $2,000 (2016).