How Obamacare will affect your federal tax return

Politics aside, the Affordable Care Act could affect your federal taxes this year and in years to come.

To help his clients, Marty McCutchen, a Fort Worth certified public accountant, has written The Pocket Guide to Obamacare.

“It’s an 80-page book written in plain English,” he said. “I try to boil it down to make it simpler.”

The paperback guide doesn’t cover how to pick insurance, just the tax implications of the law, he said.

The self-published guide is available for free, McCutchen said. You can ask for a copy to be mailed to you at his website,

The law’s tax implications aren’t as large as when President Ronald Reagan rewrote the tax code, but they are significant, said Blaise Bender, a CPA and attorney in San Antonio who will give a two-day class for local CPAs on federal tax updates in January.

“Historically, I would compare it to when President Carter implemented the windfall profit tax,” he said. “People don’t understand that there are tax implications.”

The two biggest changes, Bender said, are the penalty for not buying insurance and the additional tax, called a Medicare surtax, starting on wealthier households.

If you don’t buy insurance for next year, the penalty is relatively small — $95 per adult and half that per child, Bender said.

“A family of four with a $54,500 income would have a $272 penalty in 2013,” he said. “But by 2016, that penalty will increase to $2,085. Many families are dependent on their tax refund, and the penalty will be deducted from that.”

For those with much higher incomes this year ($250,000 in adjusted gross income for a married couple) the Medicare surtax will add a tax of 3.8 percent on net investment income and 0.9 percent on compensation, Bender said.

“That’s a big deal from a tax preparation standpoint,” he said. “Many who are getting taxed may not be paying enough in terms of withholding now and will owe that tax when they file.”

One possible way to lower your income and avoid the tax is to invest in a Roth IRA or convert a regular individual retirement account to a Roth IRA, he said.

Susan Adams, president-elect of the Fort Worth chapter of the Society of CPAs, said some employees are also having to make health insurance decisions for the first time if their employer drops coverage and pushes them to the new federal healthcare exchange.

“A lot of people are afraid because they haven’t had to make that decision before and are confused about the subject,” she said. “A lot of education is required.”

Adams, who works for Huselton, Morgan and Maultsby in Dallas, said many are also unaware that they are eligible for tax credits to help pay insurance premiums.

“The income levels are pretty high for the credit,” she said. “It goes up to 400 percent of the poverty level, which can mean a modified gross income in the $90,000s for a family of four.”

She cautions that the tax credit is based on estimated income.

“If your taxable income goes up when you file in 2015, you may have to refund the subsidy you got in 2014,” she said.