Additional Tax (Penalty) for Not Having Health Insurance for 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:
• Tax exempt interest
• Portion of social security income not included in income
• Foreign earned income and the housing cost of individuals who live abroad
This means the penalty will begin to be calculated once the modified adjusted gross income exceeds:
• $10,150 for single individuals
• $20,300 for married couples filing jointly
Or
• A flat dollar amount of $95 per adult family member age 18 and older, and $47.50 for each dependent under age 18. This amount is capped at $285 for Tax Year 2014.

One percent (1%) of income will begin to exceed the flat dollar amount when their modified adjusted gross income exceeds:

• $19,650 for Single individuals
• $39,300 for Married couples with no dependents
• $44,050 for Married couples with one dependent under age 18
• $48,800 for Married couples with two or more dependents under age 18

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:

• Taxpayer does not have to file a federal income tax return because their income is below the filing threshold
• Taxpayer is uninsured for less than 3 months of the year
• The lowest cost health insurance coverage available to the taxpayer would cost more than 8% of their household income
• Taxpayer is in jail or prison
• Taxpayer is not lawfully present in the United States
• Taxpayer has a qualifying religious exemption
• Taxpayer is a member of one of the following:
• Federally recognized Indian tribe
• A recognized health care sharing ministry
• Taxpayer obtains a hardship exemption

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.