The 2014 tax penalty is a fee that will occur if you are not covered by any insurance during the year of 2014. If you didn’t have coverage in 2014, you will be penalized either:
- 1% of your yearly household income.
- $95 per person for the year ($47.50 per child under 18).
When you file your federal income tax for 2014 you will have to pay the higher of these two amounts.
If You are Only Covered Part of the Year:
If you do not have coverage for just part of the year, 1/12 of the yearly penalty applies to each month you do not have insurance coverage, but If you are not covered for less than 3 months of a calendar year, you don’t have to make a payment.
The fee will grow within the next two years in 2015 the penalty will increase to $325 per adult or 2 percent of your income, and in 2016 it will be the greater of $695 per adult or 2.5 percent of income. The amount you must pay will be capped at the national average cost for a bronze health plan, Which is intended to have the lowest premium of the four new health plans.
If you do not pay the Fee:
If you do not pay your penalty the IRS will hold back the amount of your penalty and take it from future refunds. Although paying the fee is absolutely crucial and important, there are no criminal penalties or liens for failing to pay the fee.
How to Avoid the Penalty Fee:
You can avoid the penalty fee by obtaining minimum essential coverage during enrollment and maintaining it throughout the year, or you can get an exemption. The fee is only owed for each full month you go without coverage. If you have coverage for even just one day in a calendar month, you will not have to pay the fee for that month. If you would like to learn more about minimum essential coverage click here for more information.