IRS

Teens Who Work: Does Their Income Count?

Think of yourself as a teenager. Did you work? Did you have a summer job lifeguarding at a pool, or a year-round job bagging groceries? Did you referee kids' soccer or baseball, or babysit your neighbor's first grader?

If you did work, then you are just like millions of American teenagers, who work for spending money, to help the family pay bills, or to save money for college. 

Found online  here .

Found online here.

Lower-income families, filling out a Medicaid or Marketplace application, may wonder if the teen's income "counts."

Counting A Dependent's Income

The short answer: If the teenager's annual income is less than the required threshold for filing taxes ($6300 for earned income in 2016), then the income does not "count" as family income. If the teenager's annual earned income is more than the required threshold for filing taxes, then the income does "count" as family income. [Unearned income, such as interest from stocks or bonds, has a lower threshold to require tax filing.]
What if you have a dependent who is not a teenager, but who works? For example, what if your elderly mom lives with you and you take her as a dependent on your taxes?  What if she works 5 hours/week at a local store? The same tax filing threshold rules apply.

A Tale Of Two Families

Family 1: Maria, Juan, and Elizabeth

Maria is a single mom of Juan, age 17,  and Elizabeth, age 10. Maria works for a temporary agency and makes about $1700/month, or $20,400 annually. Using just that income, she--and her children--all qualify for Medicaid. 

Juan wants to go to college, and worked all summer scooping ice cream. He made $5,000. During the school year, though, his mom doesn't want him to work, because she wants to make sure he gets good grades. 

TEST YOURSELF: For Medicaid and the Marketplace, is the family income: 

icecreamscoop
  1. $5,000
  2. $20,400
  3. $25,400

 

If you answered #2, $20,400, you are correct. That's because Juan's ice cream income does not get added to the family income because it is less than the tax filing threshold. The entire family should be eligible for Medicaid.

**Note that Juan might still file taxes since he might get some money back in a tax refund--but it's the fact that he doesn't HAVE to file taxes that will mean that his income doesn't get added to his mom's income for the purposes of health insurance eligibility.

 

Family 2: John, Anne, Sarah and Jesse

John and Anne are married. Sarah is 16 and Jesse is 14. John cooks at a restaurant and makes about $2500/month, or $30,000/year. Anne recently went back to college and works very part-time in a grocery store, making about $500/month, or $6,000/year. Sarah wants to go to college, and she also likes to have some spending money, so she works full time in the summer, and part time during the school year, at the restaurant where her dad cooks. This year, she expects made $10,000.

TEST YOURSELF: For Medicaid and the Marketplace, is the family income: 

  1. $6,000
  2. $30,000
  3. $36,000
  4. $46,000

If you answered #4, $46,000, you are correct. That's because Sarah's income is above the tax filing threshold (she must file taxes), and so it gets added to John and Anne's income. The children--Sarah and Jesse--will still be eligible for MIChild. If John does not have an offer of employer insurance, then John and Anne will be able to go on the Marketplace

Resources

Teen Jobs and Tax Issues from Bankrate. 

How to File Your Child's First Income Tax Return from Investopedia. 

IRS Publication 929 - a very detailed explanation of dependents and income filing requirements.  

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Got Out Of Prison? Now You Need Health Care!

According to the Bureau of Justice Statistics, over 2.2 million people are in prisons and jails. So chances are good that you know somebody who is incarcerated, or has gotten out of jail or prison. Many people who are in prison or jail have physical health, mental health, and oral health needs--and those needs don't go away when they are freed.

Sometimes, people get information while still in prison about how to access medical care--but other times, they don't know what to do! In reality, the choices are very similar to people who have not been incarcerated.

Medicaid

If you are not working, or if your income is low enough, you will be eligible for Medicaid. Apply anytime!

NOTE: If you had Medicaid before you were incarcerated, while you were imprisoned you may have been listed in the Medicaid system as having Medicaid for Incarceration. When you are incarcerated, Medicaid only pays for inpatient hospital expenses. If you are STILL listed in Medicaid's records as being incarcerated, even though you are now free, you may need to call the Medicaid Beneficiary Help Line, (888) 367-6557, in order to tell them you are out of prison, and you should get full Medicaid. 

Employer Insurance

If you are employed, and your employer insurance is affordable, you will need to take your employer insurance. Getting out of prison should give you a 30-day special enrollment period, so be sure to get on the insurance right away, if you are eligible.

Marketplace Insurance

If your income, or your family income, is a bit higher, you can sign up for health care on the Marketplace. Getting out of prison entitles you to a 60-day special enrollment period. Don't delay, because if you miss it, you won't be able to get health insurance until the next open enrollment period (November - January)! 

If you have a Marketplace plan, and someone in your family becomes incarcerated, you need to report a life change to the Marketplace. People who are incarcerated are not eligible for Marketplace plans. 

will i owe a health care penalty for when i was imprisoned?

At the end of the year, if someone in your family was incarcerated, they will qualify for an exemption from the requirement to have health care during that time. For 2015, this was exemption F.  Be sure to mark the exemption when you fill out IRS Form 8965.

NOTE: The U.S. government just released more specific rules about the definition of incarceration, and when you are eligible to get health care on the Marketplace. You can read more here.

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Three Steps Toward Qualifying for a Health Care Tax Exemption

In 2015, maybe you...thought you had health care, but you didn't

...you missed open enrollment on the Marketplace

...you lost your job and didn't realize you could apply for Medicaid or the Marketplace

...you thought health care would be too expensive. 

Now, you're doing your taxes, and you realize that you should have had health coverage, and since you didn't, you might need to pay a penalty! The penalty for 2015 could be as much as 2% of your income.

1. Before you panic, take a look at your whole family, and each person individually, to see if all or part of your family qualifies for a tax exemption. 

Look at each person in your family separately to figure out who might qualify for an exemption.

Look at each person in your family separately to figure out who might qualify for an exemption.

If anyone does qualify for an exemption, you will need to fill out IRS form 8965. 

2. The IRS has some excellent resources.

Don't forget--if you are low-income you can do your taxes with free software, free filing, and no messy handwriting!   

Don't forget--if you are low-income you can do your taxes with free software, free filing, and no messy handwriting!

 

If you got a Marketplace exemption, you will get a letter with an Exemption Certificate Number. [Can't find your letter? Log into your account on healthcare.gov and download it again.] If you have an IRS exemption, you just fill it in on Form 8965. 

Common reasons for exemptions:

  • The insurance you were offered was unaffordable
  • You only missed coverage for a couple of months
  • You are a member of a federally-recognized Indian tribe.

Less common reasons for exemptions:

  • Someone in your house was out of the country for several months
  • Someone in your household is not documented
  • You had a special hardship, such as an eviction.

3. File your taxes! You can get free help at these locations.

And while you are doing your taxes, think about the implications for next year. If during the next year, you get married...divorced...get a new job...lose a job...have a baby...move...graduate from college...it would be prudent to get a health care check-up! That would be a good time to visit the Washtenaw Health Plan or get some other health insurance help!

 

 

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It's Tax Time! Get (Free) Help!

People need help filing their taxes for many reasons. Whatever the reason, there are some great resources for getting help filing your taxes.  

Remember that the Affordable Care Act requires everyone to have health care coverage for at least 9 months of the year. You may have received from 1095 from your employer, the state of Michigan or the Marketplace.  Make sure to add this document to the papers you bring to the tax preparation service. 

Here is a list of documents to bring with you to any tax preparation appointment or gather before you start your tax return online:

  • Social Security Card for all family members, picture ID for all adults
  • W-2 forms for all jobs worked in the previous year
  • Proof of rent or mortgage and property tax payments
  • Childcare provider's name, address and federal tax ID number
  • Blank, voided check or deposit slip to set up direct deposit of refund
  • 1099 forms for other income, including unemployment or contract work
  • Supplemental Security Income (SSI) letter
  • Copy of your last year's return ( if available)
  • Last year's heating bills (11/2014-11/2015)
  • Any other tax-related letters or documents

 

VITA - United Way of Washtenaw county

FREE income tax preparation assistance from the United Way of Washtenaw County for residents making up to $53,000.

  • Call 734-677-7235 to schedule an appointment or email vita@uwwashtenaw.org.  Appointments are available Thursdays 5:30-8:30pm 2/4/16 to 4/716 and Saturdays 10am-4pm.  Meet at United Way, 2305 Platt Rd. Ann Arbor, 48104. 
  • Call 734-428-7722 to schedule an appointment at Manchester Community Resource Center, 410 City Rd. Manchester, 48158.  Appointments are available Mondays 10am-3pm 2/1/16 to 3/21/16. 

Many other areas in Michigan have VITA or other tax assistance--use this link to find help in your area.

MyFreeTaxes.com

Do you use a computer?  Do you have access to the computer?  Does your family make $62,000 or less?  Myfreetaxes.com is a free online service for tax preparation and filing from United Way and H&R Block.  Myfreetaxes.com provides email, live chat and telephone support in English and Spanish.  80% of people who filed using this service finished in less than 1 hour.  

 

AARP Tax Aide

TAX AIDE LOCATOR - FIND AN AGENCY NEAR YOU

AARP Tax Aide offers free tax preparation help to anyone, especially if you’re 50 and older and can’t afford a tax preparation service.  Find a location using the Tax Aide Locator below.  Washtenaw county locations include the Ann Arbor Community center, Milan Senior Center, Saline Area Senior Center, Ypsilanti District Library and more. 

 

Catholic Social Services of Washtenaw County

Limited income senior citizens can call 734-712-0588 to find out more information about how to make an appointment. The program works year-round with community senior centers (Ypsilanti, Chelsea, Dexter, Northfield and Pittsfield Twp.) and senior housing facilities to schedule appointments regarding tax form preparation, Michigan Home Heating Credit, Michigan Homestead Property Tax Credit and Michigan and Federal Tax Returns. 

 

U of M Law School Low Income Taxpayer Clinic (UMLS LITC)

UM Law School  LITC helps clients resolve issues (issues involving <$50,000) with the IRS.  Call 734-936-3535 to see if you are eligible or complete an online client application.

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Filing Taxes and Marketplace Health Insurance - Form 8962

Forms you need to file

Under the Affordable Care Act, everyone needs to have insurance.  When you file your taxes, you prove that you had insurance by submitting a form.  If you were enrolled in health insurance during 2015, you will receive one or more copies of a 1095-A, B or C.  (Read about those forms here.)  Your 1095 forms will be mailed in early February.  You can also find your 1095-A in your Marketplace account in your messages.  These forms are filled out by the Marketplace, your employer, or Medicaid. Don't fill it out yourself--if you think the information is wrong, you can get a corrected form.  

keepcalmtaxtime

If you take your tax information to a tax preparer, bring those forms with you.  If you prepare your own tax forms, you will need those forms to file your taxes. 

If you had employer coverage or coverage through public insurance like Medicaid or Medicare, you simply provide those forms when you file your taxes. If you got health coverage through the Marketplace, it is a different story.

Reconciling Tax Credits

If you received tax credits to help pay your health insurance premiums, then you paid part of your health insurance costs and the government paid part of your health insurance costs.


At the end of the year you reconcile your tax credits when you file your taxes. You will need Form 8962 and your 1095-A.  Remember when you enrolled in Marketplace insurance, you agreed to file taxes and reconcile the income reported on your application with your actual income on your tax return.  

 

As can be seen in the example above,  you get Advance Premium Tax Credits (APTCs) when you do your application for health insurance on the Marketplace. At the end of the year, you take a look back. If you estimated correctly on your income, your Advance Premium Tax Credits turn into Premium Tax Credits, and you don't owe anything, but you also don't get anything back. If you estimated low (and end up making more money), you may owe back some of those tax credits. If you estimated your income high (and don't do as well financially), you may get some additional Premium Tax Credits. This reconciliation, as it is called, happens with the help of Form 8962.

You only need to reconcile tax credits for the months where you had APTCs. If, for instance, you had employer coverage the first half of the year, and Marketplace coverage the second half of the year, you will indicate that on your taxes, but you will only reconcile your APTCs for the second half of the year.

One more caveat--if you don't reconcile your tax credits, then you won't be able to get Advance Premium Tax Credits on the Marketplace next year.

Coming soon: How to get tax help

--M. Buhalis and R. Kraut

 

 

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