Calculating ACA Penalties, More Love for the EITC
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.
Interested in subscribing to The Daily Deduction, the Tax Policy Center summary of the day’s tax news? Sign-up here for free access. If you’d like to tell us about a new research paper or have any comments about our new feature, just drop us a note at firstname.lastname@example.org.