ACA Penalty

As I understand it, the penalty for not having health insurance is assessed through the tax return system. One of the questions on the 1040 explicitly asks if you have coverage, and if you indicate you don't have coverage, I believe the penalty is added to your tax bill.

What happens in a case where a person fails to buy health insurance, but also has no income and isn't required to file a return? How and when is the penalty assessed?

Reply to
Rick
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Per a tax update text I have (Spidell), here is your answer:

"[ACA Shared Responsibility Requirement] Exemption for income below the filing threshold: If a taxpayer?s income is below the tax return filing threshold, the taxpayer need not file a tax return to claim an exemption. However, the exemption may be claimed on Form 8965 if the taxpayer files a tax return (for example, to claim a refund of withheld taxes). Note that there is an exemption for household income below the filing limit and one for gross income below the filing limit. Either exemption may apply."

Reply to
Mark Bole

The question was about how the penalty is assessed, not how you apply for an exemption.

I think the OP just didn't realize that if your income is below the filing threshold, you're automatically exempt from the ACA requirement. So there's no penalty to assess.

Reply to
Barry Margolin

[...]

The main question was, "what happens in a case where a person fails to buy health insurance, but also has no income and isn't required to file a return?"

That's the question I answered -- what happens is, you get an exemption, for which you may or may not end up filing a return ("applying" for / claiming the exemption).

If you want to answer the 2nd question, be my guest, however it seems the OP already knew the answer to that: "One of the questions on the

1040 explicitly asks if you have coverage, and if you indicate you don't have coverage, [...] the penalty is added to your tax bill."
Reply to
Mark Bole

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