what is the penalty on taxes for having no isurance for 3 months due to divorce
If yous did not have creditable health insurance coverage in 2020, y'all and your family unit may be subject to California'due south health intendance mandate penalization for lack of health insurance. There are several conditions that, if properly documented, will allow you to avoid the penalty when y'all file your California income tax return. You lot must asking an exemption from the penalty for most atmospheric condition with Covered California.
Exemptions From California Wellness Care Mandate Penalty
The health care mandate penalization will be reconciled on your California income taxation return and administered by the Franchise Tax Board. The penalty for a full twelve months of no minimum essential wellness insurance coverage will either be a apartment amount of $750 per adult ($375 per dependent) or 2.v percent of the gross income that exceeds the filing threshold, whichever is higher. The penalty applies to those months in which you or your family did not have health insurance coverage.
In that location are several conditions that volition exempt you from having to pay the penalty on your California income revenue enhancement return. Certain conditions volition be process by the Franchise Tax Board (FTB) such as –
- Federally recognized Indian tribe and Alaska native members
- Short coverage gap resulting in no punishment
- Members of health care sharing ministries
- Income is below the taxation filing threshold
- Enrollment in limited scope Medi-Cal
- Certain citizens living abroad
- Incarceration
FTB lists other conditions claimed on the State tax return that tin can besides be used for an exemption.
- Health coverage considered unaffordable (exceeds eight.24 percent of household income)
- Families' cocky-only coverage combined cost is unaffordable
Covered California Application For Penalization Exemption
However, many of the FTB exemptions seem to overlap with those exemptions that must be approved by Covered California.
- Religious censor exemption
- Affordability hardship
- General hardship
Every bit of November 2020, FTB has non posted what they will consider acceptable documentation for those exemptions that can be claimed on the State tax render and don't need approval from Covered California. The condition of Families' self-only combined cost is unaffordable seems to refer to employer group coverage where the spouse and dependents receive no employer contribution to lower their health insurance cost.
Unfortunately, if the cocky-only or employee-only contribution is considered affordable, the spouse and dependents cannot receive subsidies from Covered California. If the self-only unaffordable exemption pertains to employer group coverage, what is the documentation that FTB will have to waive the penalization for any spouse and dependents? These are the fiddling details we are waiting for from FTB.
In terms of individual and family unit health insurance being generally unaffordable, Covered California can provide the documentation. They take all the health insurance rates by age and region. They can tally the costs of health insurance annually for household members. That price is compared to the calculated household income on the State tax return to determine affordability.
In social club to go one of the exemptions Covered California grants, y'all need to file a request for an exemption with Covered California. The three categories are-
General hardship: homelessness, eviction, domestic violence, bankruptcy, medical debt, unexpected increases in household expenses, natural disaster, etc.
Affordability hardship: when 1. The cost of the lowest-price Statuary programme, less whatever subsidy, or lowest price employer plan premium exceeds 8.24 percent of projection income. ii. When the cost of the employer grouping for spouse and dependents is more than than eight.24 percent of projected income.
Religious conscience: fellow member of a recognized religious sect who opposes health insurance.
As of November 2020, the only style to apply for an exemption through Covered California was to use an online application that utilizes DocuSign. For individuals who do non ain a computer or do not have internet access, this could be challenge. I have non found any paper exemption applications on the Covered California website. That doesn't mean they are not in that location or that they won't be created later on.
Fifty-fifty though the exemptions pretty much mirror the federal listing – when in that location was a federal private mandate penalty – the application still needs to be reviewed by humans. This will take time. If y'all need to request an exemption from California'southward health care mandate penalty, do it early and get-go with Covered California. Fifty-fifty if information technology is an exemption that the FTB tin grant, I'd notwithstanding file a Covered California exemption application.
Many Exemption Questions Remain Unanswered
We don't know how FTB is going to process the exemptions, whether a human existence or machine will make a determination. If you apply with Covered California, and they respond that they don't grant the blazon of exemption requested, you can cross that off of your list. The default in that situation volition be FTB. Don't expect a quick plow around if y'all file an exemption application with Covered California on April 14th because your taxes are due on the 15th. Beginning early on considering I remember Covered California will have a vanquish of applications at the terminal minute equally taxation payers realize they have to cough upward thousands of dollars in penalties for non having creditable minimum essential coverage.
Similar to applying for the Premium Revenue enhancement Credit subsidy through Covered California, no reckoner software program tin can completely recognize the diversity of household situations that may lead to a partial or full exemption from the penalty. For case, you may non take had health insurance because of the cost relative to your household income for the starting time one-half of 2020. Then you picked up employment and your final adjusted gross tax filing income was high plenty so that the premium amount of the health insurance is below viii.24 percentage.
If the FTB only looks at your final income corporeality, like the IRS does, they could ignore any affordability exemption and charge y'all the penalty for those showtime six months of the yr. Because nearly family situations are not static for the entire year, it is best to starting time preparing early for defending your asking for an exemption from the penalty. This ways good record keeping and documents showing income, wellness insurance premiums offered to you, and other family and fiscal considerations.
Source: https://insuremekevin.com/avoiding-californias-health-care-mandate-penalty/
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