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IRS Tax Filling Thresholds

The IRS’s tax filing requirement thresholds, based on filing status, take on added significance since the introduction of the Affordable Care Act’s Individual Shared Responsibility Payment’s penalty provision for individuals.

These amounts, which have always determined if you are required to file a tax return, are also relevant for calculating an Obamacare fine in the following ways:

  1. There is an automatic penalty exemption for any person who is not required to file a tax return in any given year.
  2. Persons subject to an Obamacare fine, when it’s based on income (MAGI) and not the flat rate amount, will deduct their tax filing status threshold amount prior to applying the applicable percentage rate (2.5% for 2016).

Single, Head of Household, Married Filing Jointly, Married Filing Separately and Qualified Widow(er) with Dependent Children are the tax filing status options and each one has a different income threshold.

Note: These amounts usually change yearly since they are adjusted for inflation. We take this into account but our Obamacare penalty calculators only allow you to choose from Single, Head of Household and Married Filing Jointly.

Seniors & IRS Thresholds

Persons age 65 or older are given a higher tax filing threshold regardless of their filing status. However, this is not a factor since the Obamacare penalty provision should not apply to them.

Senior citizens are typically eligible for Medicare which certainly counts towards having Minimum Essential Coverage.

The 2016 IRS Thresholds

The IRS has not yet published tax filing thresholds for 2016. When the information becomes available we will post it here. Remember that those taxes are not due until April of 2017. We have decided, for now, to use the 2015 figures in our 2016 Obamacare penalty calculator.

The 2015 IRS Thresholds

Married couples were to deduct $20,600 from their 2015 MAGI prior to calculating their 2% Obamacare fine, if any. Married couples who earned less than this filing threshold in 2015 were automatically exempt from any ACA fine.

Single filers were to deduct $10,300 prior to calculating their 2 percent penalty, if any. Likewise, if you earned less than $10,300 in 2015 then you were also exempt from paying an Obamacare fine.

Those filing Head of Household were to deduct $13,250 from their 2015 income for the purposes of calculating a possible Obamacare fine.

Repeat: If you were not required to file a return, due to income below your filing threshold, there was no possibility of a penalty for being without insurance during 2015.

The other filing status options have different thresholds but again, unfortunately, our calculators do not offer the option to select them.

2015 Flat Rate or 2 Percent

It’s important to understand that these threshold deductions only applied to tax filers whose fines for 2015 were based on 2% of their income rather than the flat rate amount which typically applies to lower income earners.

In other words, If 2% of your 2015 MAGI was higher than $325 (for Single filers) or $975 (for families) then the above threshold deductions are relevant to you.

Obamacare Fine Calculator

Our 2015 Obamacare penalty calculator.

The 2014 IRS Thresholds

Married couples were to deduct $20,300 from their 2014 MAGI prior to calculating their 1% Obamacare fine, if any. Married couples who earned less than this filing threshold in 2014 were automatically exempt from any ACA fine.

Single filers were to deduct $10,150 prior to calculating their 1 percent penalty, if any. Likewise, if you earned less than $10,150 in 2014 then you were also exempt from paying an Obamacare fine.

Those filing Head of Household were to deduct $13,050 from their 2014 income for the purposes of calculating a possible Obamacare fine.

Repeat: If you were not required to file a return, due to income below your filing threshold, there is no possibility of a penalty for being without insurance during 2014.

The other filing status options have different thresholds but again, unfortunately, our calculators do not offer the option to select them.

2014 Flat Rate or 1 Percent

It’s important to understand that these threshold deductions only applied to tax filers whose fine for 2014 was based on 1% of their income rather than the flat rate amount which typically applies to lower income earners.

In other words, If 1% of your 2014 MAGI was higher than $95 (for Single filers) or $285 (for families) then the above threshold deductions are relevant to you.

Obamacare Fine Calculator

Try our 2014 Obamacare penalty calculator.

Look on the Bright Side

Think of your filing threshold as a sort of tax deduction when calculating an Obamacare fine if, and when, you are subject to the penalty based on a percentage of your MAGI instead of a flat rate amount.

In this sense, you will owe less than 2.5% of your income (2016 and future years) due to this threshold deduction. Actually, your Obamacare fine could be significantly less than 2.5% if you are a high-income earner since there is a ceiling to the ACA penalty.