Guidance on Client Question

kstein

Guru
1000 Post Club
1,157
I had someone pose this question to me, what say ye wise forum members?

Your assumptions about Brian are correct. No earned income and only reportable income as you stipulated. His health care status may have a tax impact on us and we need to clarify that with you. He is now enrolled in Obamacare as of March 1. Since he is our dependent we may be held liable for his not having Federally mandated health care coverage last year. Our understanding was that we could pay cash out of pocket for any health needs he might incur, and any penalties (1% of annual income) for not being enrolled in Obamacare in 2014 would be based on his earnings ($00.00). Our current readings on this subject cause us to fear that the 1% penalty from last year can in fact be levied against us since he is our dependent for tax purposes. His income is irrelevant according to Obamacare representatives we have talked to over the phone. Regardless of his inability to hold a job as result of his mental health, since he lives with us the government may look at our annual income, not his, as the basis for his penalty for not having coverage. If we had understood that this would be the case, we would have muscled up and bought health care coverage for him last year. This another example of an overbearing government/President imposing complex and difficult to understand laws on its citizens and taxpayers, and the resulting unintended consequences that result from their "feel good" and wealth redistribution policies and programs. Even one more year of this Administration is almost too much to bear! We will need a reading from you as to whether or not our concerns have merit.
 
Punt.

Unless you are a tax advisor, I'd tell them to speak with one. It is too easy for them to follow your advice and then try to hold you liable for it.
 
Since I'm not a tax advisor, I can't tell you to consider not claiming him as a dependent on your taxes in 14'. Or claiming him will result in a lower tax bill vs paying the penalty. Nor can I tell you the penalty can only be recouped via a tax refund. Nor can I tell you about what I already forgot. Thank god I'm not a tax advisor
 
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