Individual Penalties Waived for Some Taxpayers

Posted by BAS - 05 March, 2015


The Internal Revenue Service will waive penalties for certain taxpayers who received subsidized health coverage through the Exchange but still owe a penalty for not satisfying the individual mandate for health coverage. The waiver applies only to certain people who received subsidized health insurance during 2014.  

If an individual was initially eligible for premium assistance in 2014, used that assistance to purchase coverage through the Marketplace, and later became ineligible for all or part of that subsidy, the IRS may consider a partial penalty waiver. When salary changes mid-year, someone who is receiving assistance with Marketplace coverage must inform the government of the pay increase and ask the government to alter the subsidy. When filing a tax return, the individual must reconcile eligibility for premium assistance with actual income and pay back some of the subsidy if the individual was not eligible for the full subsidy. The repayment must be made with the filing of the tax return or through estimated tax payments throughout the year. 

If an individual failed to request recalculation of premium assistance or did not pay estimated tax payments, the IRS will waive penalties and interest on the amounts to be repaid. To take advantage of the waiver, the individual must submit a letter request for a penalty waiver.

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