US tax return and obamacare

[steve2112]

i'm a US citizen and i usually file a US tax return every year even though technically i don't need to as my income is below the $10300 minimum, and in previous years i have qualified under the bonafide residence test for my foreign earned income anyhow.

i just checked again here

https://apps.irs.gov/app/IPAR/screen/IPAR_1/en-US/summary?user=guest

and get the result "

Do I need to file a tax return for 2015?

You are not required to file a tax return for 2015

You are not required to file a tax return because your income does not equal or exceed $10,300, nor do you owe any special taxes or have any special situations that require you to file. "

last year i spent about 4 months in the US, made no money, but it has come to my attention that I could get fined because I didn't have Obamacare. however, I read that if you do not have enough income to meet the level required to file a tax return, then you are exempt from the fine.

so i'm thinking about not filing, but I don't want to get into problems with the tax people and down the road with the social security people as i am relying on social security for my future. i prefer to file, even through i'm making almost nothing, but then will i get hit up for the Obamacare fine?

please no politics on the whole Obamacare thing, i just want practical, informed advice.

thx steve

[steve2112]

i think i found the answer here

https://www.healthcare.gov/exemptions-tool/#/results/2015/details/income-below-threshold

How to claim an exemption if your 2015 income is below your tax filing threshold

If your 2015 income is below the amount that requires you to file a federal tax return, you can claim a health coverage exemption.

This means you won’t have to pay the fee for 2015.

IMPORTANT: The only way to know if you qualify for this exemption is to complete your 2015 federal income tax return.

What you need to know about this exemption

• You claim this exemption when you file your federal tax return.

• If you can claim this exemption, it will probably apply to everybody on your tax return who didn’t have coverage in 2015. You’ll find out when you fill out your return.

• To qualify for this exemption, you’ll use your gross income. The IRS instructions explain what’s included in gross income.

Do this first

You can claim this exemption when you file your 2015 federal income taxes. Most people file their taxes for 2015 by April of 2016. The IRS will publish information about claiming exemptions on 2015 tax returns later in 2015.

Edited February 1, 2016 by steve2112

[skatewash]

Steve,

It would seem that you qualify for the free online version of Turbo Tax 2015 (Freedom Edition): https://turbotax.intuit.com/taxfreedom/

This includes free e-file of federal and state tax returns. It also includes a Form 8965 (Health Coverage Exemptions) from which you can get your Obamacare exemption (you would qualify under the income below filing threshold exemption).

It sounds like your tax situation would be pretty straightforward, shouldn't take a lot of time to prepare your return using Turbo Tax.

Also, by filing a return you limit any possible additional assessment by the IRS after a period of three years (barring fraud on your part). In other words, by filing a tax return, you start the statute of limitations clock running and at the end of a three-year period the IRS is barred from seeking taxes or penalties that may be due from 2015. If you don't file a return the statute of limitations clock never starts.

[steve2112]

thanks but i asked the same question on another forum that's very specifically US tax issues related and the consensus is, don't file if you don't need to, which i don't at my income level

[slerickson]

thanks but i asked the same question on another forum that's very specifically US tax issues related and the consensus is, don't file if you don't need to, which i don't at my income level

Then you should not. But note it's not just about an income threshold. It's also based on whether you have specific types of income or assessments such as capital gains, etc. the irs.gov website will have a link and questionaire online that will tell you if you need to file. Also as for worries about auditing, with a low income level the it's wouldn't be much interested in auditing. They consider whether the potential for $$ is worth the time and expense. Where audits typically come up is a discrepancy in your return vs what someone claims to have paid you or some other financial transaction is reported to irs.

[skatewash]

If you are not otherwise required to file a tax return, you do not need to file a return solely to report your coverage or to claim an exemption from the coverage requirement.

-- https://www.irs.gov/Affordable-Care-Act/Individuals-and-Families/ACA-Individual-Shared-Responsibility-Provision-Exemptions

[steve2112]

If you are not otherwise required to file a tax return, you do not need to file a return solely to report your coverage or to claim an exemption from the coverage requirement.

-- https://www.irs.gov/Affordable-Care-Act/Individuals-and-Families/ACA-Individual-Shared-Responsibility-Provision-Exemptions

thanks for pointing that out.

although it doesn't specifically say so, it's implied that if i'm not filing a return, i should not file a Form 8965, is that right?

[skatewash]

If you are not otherwise required to file a tax return, you do not need to file a return solely to report your coverage or to claim an exemption from the coverage requirement.

-- https://www.irs.gov/Affordable-Care-Act/Individuals-and-Families/ACA-Individual-Shared-Responsibility-Provision-Exemptions

thanks for pointing that out.

although it doesn't specifically say so, it's implied that if i'm not filing a return, i should not file a Form 8965, is that right?

Yes. If it's true that you are not required to file a tax return, which you can verify by doing this little interview: https://www.irs.gov/uac/Do-I-Need-to-File-a-Tax-Return%3F then it is also true that you do not need to file a Form 8965 to claim one of the Obamacare exemptions. An implication of not being required to file a tax return is that you would qualify for the "income below the filing threshold" Obamacare exemption. Because this is true, and moreover recognized by the IRS as being true, it is not necessary to file the Form 8965 (or even a tax return) under these circumstances.

I should mention that it is possible that you could be liable for reporting information on any foreign financial accounts you may own if the aggregate value of such accounts was greater than the equivalent of $10,000 at any point in time during the past year. Such a report is called an FBAR and while it is not part of your tax return if you are required to file one and you don't do it the penalties are most draconian. If your foreign financial accounts (say bank savings accounts in Thailand) do not generate very much income, then it's possible that you would be liable to file an FBAR, but not liable to file a tax return (because your income is below filing threshold requirements).

Who Must File an FBAR

United States persons are required to file an FBAR if:

1. the United States person had a financial interest in or signature authority over at least one financial account located outside of the United States; and
2. the aggregate value of all foreign financial accounts exceeded $10,000 at any time during the calendar year reported.

United States person includes U.S. citizens; U.S. residents; entities, including but not limited to, corporations, partnerships, or limited liability companies, created or organized in the United States or under the laws of the United States; and trusts or estates formed under the laws of the United States.

Please see the "Who Must File an FBAR" section at the following site for more information: https://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Report-of-Foreign-Bank-and-Financial-Accounts-FBAR (Not sure why this is listed under the business section of the IRS site as it applies to all US Persons, regardless of whether you have a business or not.)

Edited February 2, 2016 by skatewash

[Nomyai]

I say be on the safe side and file. If you owe nothing- great . But its on record.