Daily Deduction

from the Tax Policy Center

Calculating ACA Penalties, More Love for the EITC

By :: March 7th, 2014

On health care and tax returns… You can keep your current low-benefit health insurance plan for two more years, according to the latest from the Obama Administration. But the Affordable Care Act still requires many without insurance to pay a penalty tax.  Bob Williams explains and shares a new TPC calculator that figures those ACA penalties. Chances are, they're a bit steeper than that $95 we all hear about.

(Almost) everybody loves the Earned Income Credit. Or at least the idea of it, if not its cost. Roll Call reports that New York’s pilot program reflects the Obama Administration’s plan to extend the EITC to childless workers. Under the New York program, which delivers an EITC twice the size of Obama’s proposal, most benefits would go to those earning between $6,667 and $14,300 a year. For a review of the best ways to extend the EITC, read this paper by Peter Edelman, Mark Greenberg, Steve Holt and Harry Holzer from the Georgetown Center on Poverty, Inequality and Public Policy. The basics of the EITC are here.

Tax Prep volunteers give a little and help a lot. The IRS’ Low-Income Taxpayer Clinics program’s second annual report is out, covering the 2012 tax year. Nearly 2,300 LITC volunteers gave over 59,000 hours (an average of more than 25 hours each). Together, they helped 42,700 taxpayers collect over $5.8 million in refunds in 2012, and saved them nearly $35.5 million in tax liabilities, penalties, and interest. Put another way: Each hour is worth, on average, a bit over $600 in tax savings per return.

Speaking of tax returns: Refunds are higher this year. The IRS reports that as of last Friday (2/28), the average 2013 tax refund is $3,034, up 3 percent from this time last year. The IRS has received almost 40 percent of the returns it expects to receive this season. Is your return in that group, or in the remaining 60 percent?

Enjoy the weekend… There are only six more of them till Tax Day.

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3Comments

  1. Michael Bindner  ::  4:00 am on March 9th, 2014:

    I would like it more if they expanded the child tax credit than the EITC (instead we could make equalize the employer contribution at an average and put a floor and Social Security, ending the need for the EITC – a higher minimum wage does the rest).

    Whether or not I get a tax refund depends on my penalty for not having insurance, though my wife and child do have it. I suspect there will be no refund this year – which is just as well as the Bankruptcy Trustee would get it anyway. Now THAT would be an interesting thing to report on. Most people who read this don’t know that if you are in Chapter 13, you don’t get to keep your refund. It goes to your creditors.

  2. TAX FREE WEEKEND OKLAHOMA 2014  ::  6:06 am on March 12th, 2014:

    […] Calculating ACA Penalties, more Love for the EITC – TaxVox […]

  3. TaxRebate  ::  5:03 am on April 18th, 2014:

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