February 12, 2014
It is important that everyone understands what the penalty will be for not having health insurance for all or part of 2014.
If someone does not have health insurance for Tax Year 2014 the penalty is calculated as the greater of:
1% of their modified adjusted gross income that exceeds their personal exemption (doubled for those who file married filing jointly) plus the standard deduction for their filing status.
Modified Adjusted Gross Income is defined as Adjusted Gross Income plus:
This means the penalty will begin to be calculated once the modified adjusted gross income exceeds:
One percent (1%) of income will begin to exceed the flat dollar amount when their modified adjusted gross income exceeds:
Put another way, Single individuals subject to a penalty will pay the flat dollar amount when their income is between $10,150 and $19,650. Once their income exceeds $19,650 they will pay 1% of their income.
Married couples subject to the penalty will pay the flat dollar amount when their income exceeds $20,300 and is below the income amounts above based on their family size. Once their income exceeds that amount they will pay 1% of their income.
If the taxpayer owes a penalty they must include it on their 2014 federal return.
Under the following circumstances, a taxpayer who does not have health insurance will not be subject to the penalty:
For more information on when a taxpayer may qualify for a hardship exemption and how to apply for one, see How do I Qualify for an exemption from the fee for not having health coverage on the HealthCare.gov website.