No one looks forward to tax season. Even the people who make money from preparing returns grit their teeth because they know the stretch from January to April 15 will be long and hard. But it could be worse, right?
Actually, it’s about to be, and that comes straight from the officials at the top. Internal Revenue Service Commissioner John Koskinen said that 2015 “will be one of the most complicated filing seasons we’ve ever had,” as the Journal of Accountancy reported.
It’s not that you will own more money, although you might very well. The main driver of the pain will be factors making filing far more complicated than usual. With provisions of the Affordable Care Act that become active, a Congress that likely doesn’t, uncertainty about dozens of tax provisions that are phasing out, other mind-bending aspects coming into force and an IRS that says it doesn’t have the resources to do what it’s obligated to, this is going to be one interesting ride.
Feeling Ill Over ACA Paperwork
Two provisions of the ACA — tax credits for health insurance premiums and individual mandates — will provide two sources of pain. People who haven’t made enough to afford health care may have been eligible for tax credits to offset their increased expenses. The insurance exchanges frequently calculated the likely subsidy and reduced the premiums by the appropriate amount.
Only the calculations were initially made on the previous year’s taxes. Now comes the time to settle up and figure out whether people received the right number of credits — or too few or too many. That means at least an extra form to calculate what the impact should be, and whether people with too little money already may have to send some of it to the IRS because their circumstances improved between 2013 and 2014.
Also on the ACA front is the type of coverage you have. If you do have full coverage, you check a box off on the 1040. If not, there is another form with a “complicated penalty calculation” depending on multiple factors, according to what Mark Luscombe, principal analyst for the tax and accounting group of tax information publisher Wolters Kluwer, told DailyFinance.
Uncertain Tax Regulations
Expiring provisions in the tax code will mean perspiring consumers and professionals. “It’s one of the things is something we seem to face every couple of years,” Luscombe said. “All these regularly expiring provisions have tended to be extended only a couple of years at a time.” This year there are about 60.
Some include the individual deduction for state sales tax, the above-the-line deduction for college tuition and fees, teachers’ out-of-pocket expense deduction and the ability of people over 70½ years to distribute from an individual retirement account directly to a charity so you don’t increase adjusted gross income and see a hit to Social Security income.
Not only could you end up having to pay more, but the longer a bitterly divided Congress delays on making decisions, the more pressure they invariably put on taxpayers and preparers. “The IRS forms are still in draft stage because they’ve reserved these lines, not knowing whether to include them or not,” Luscombe said. Until it’s done and the regulations are set, there are no forms to fill, software can’t correctly run, and preparers won’t be sure how to handle some situations.
Even the IRS’s own software won’t be ready to process returns and issue refunds. According to Luscombe, in 2013, problems with IRS software held up the start of the filing season by a couple of weeks and delayed refunds.
Overtaxed Tax Officials
Starting behind isn’t good for any organizations, including the IRS. Throw in inadequate resources, and it’s worse. Koskinen noted that the IRS has expanded responsibilities with a budget that’s declined by 7 percent since 2010 and a 13,000-person drop in headcount. That means fewer people to get systems ready, fewer people to process returns, fewer people to perform audits and fewer people for everything else.
This year, the IRS was able to answer taxpayer calls only 71 percent of the time. Koskinen thinks that in 2015, the number will probably drop to 53 percent.
As he almost said, things will get ugly. Leave yourself plenty of time to prepare and try to keep a sense of humor. Or maybe have a bottle of aspirin handy.
A year ago, in response to a Reddit thread titled "What is Obamacare and what exactly did it change," one user put together an exhaustive post that explains pretty much everything about Obamacare. While some of its answers are a little out-of-date, it is incredibly complete, and regularly links back to the original Obamacare legislation. For most Obamacare questions, it’s the first — and best — site.
The Well-Documented Complete Explainer
Unfortunately, for all its completeness, the Reddit explanation isn’t the most interesting read. If you want something a little more diverting, you may consider taking a peek at Obamacare: Explain It Like I’m Five. Basically, this cartoon explains Obamacare like a playground argument, a he said/she said battle between insurers and average people, with Obama running interference in the middle. As an added plus, the website also lists 24 bullet points covering most of the things that Obamacare will change.
Explain It Like I'm Five
If you want something a bit more scholarly, Obamacare Exchanges Open: The New Law Explained in Seven Easy Steps uses President Obama’s own words to explain several main points of the plan, answering questions about how it will affect health care costs, how it will impact small businesses, and the positive effect that it may have on family finances. And, for those who like bullet points, the White House has put together a list of their own.
Obamacare in Obama's Words
Speeches and bullet points and detailed explanations are all well and good, but if you’re one of those people who likes to get their weighty explanations with a spoonful of sugar, The Henry J. Kaiser Family Foundation’s new video, "The Youtoons Get Ready for Obamacare" does a great job of explaining most of the ins and outs of the new law. It’s hard to find a better ground-level understanding of how the new law will affect your life.
The Fun Video Approach
Health Insurance Exchanges Open Tuesday (and Not Much Will Happen)
Survey: Most Americans Against Defunding Obamacare
The 5 States Where Obamacare Costs the Most
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