The Corner

This Tax Season Was Already Going to Be Bad for Taxpayers. Obamacare Is Making It Worse

We knew that this tax filling season was going to be painful. But at the end of last week, it got trickier for thousands of taxpayers thanks to another Obamacare mistake. The Wall Street Journal reports that the IRS ”sent some 800,000 people incorrect tax statements about their coverage in 2014″ — that 800,000 number covers 20 percent of those who enrolled in 37 states.

More from the Journal:

The announcement of the inaccurate forms caps the rough first year for the health-care law, and means many taxpayers will have to wait to file tax returns. The error affects as many as 20% of the statements sent by the federal insurance website to people who signed up for coverage for 2014 and received tax credits to offset the cost of their premiums. …

The statements sent to taxpayers from HealthCare.gov are used to determine whether tax credits were the correct amount. The credits are pegged to the cost of premiums in a consumer’s area as well as to income for the past year. Consumers who received too large a credit must reimburse the government, and those who received too little can claim additional money when they file their taxes.

The forms contained an incorrect value for the local premium, which affects other calculations, the officials said. The government is notifying those who received an incorrect statement.

It is very difficult for consumers to know on their own whether the local premium listed on the statement, known as a 1095-A, is incorrect. Some 50,000 people appear to have already filed their taxes using incorrect statements, federal officials estimated, and a Treasury Department official said the IRS was reviewing what to do about them. The 750,000 who haven’t yet filed are being told to wait until they get corrected statements.

According to National Journal, California made a similar mistake, affecting 100,000 of is own citizens. 

This is what it means for the unlucky taxpayers:

CMS said that people who need to file immediately should contact its call center or use an online tool at HealthCare.gov to identify the correct cost of the benchmark plan on which their subsidy is based.

That’s little consolation, suggested Mark Ciaramitaro, vice president of health care services at H&R Block.

“The unfortunate reality is that for many of these impacted taxpayers, the tax refund could be the single largest financial payout of the year,” he said. “For those who have not filed, through no fault of their own, they are being told to wait to file a tax return, further delaying access to their tax refund.”

Obamacare implementation really is the gift that keeps on giving. Well, if you consider uncertainty, failed promises, and tax-season stress to be gifts.

 

Veronique de Rugy is a senior research fellow at the Mercatus Center at George Mason University.

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