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If your income is low enough and you don’t want to (or can’t) sign up for Medicaid, you may be exempt from the penalty for remaining uninsured. According to HealthCare.gov, the federal ObamaCare website, one reason for exemption from the Individual Responsibility Payment is “You don’t have to file a tax return because your income is too low.”
And what does ‘too low’ mean exactly?
According to information recently released by the IRS and reported by Forbes, the following figures apply for the 2014 tax year:
- Standard deduction for 2014 – $6,200 for single taxpayers and married taxpayers filing separately, $12,400 for married couples filing jointly and $9,100 for heads of household
- Personal exemption for 2014 – $3950
Since income that is equal to or less than the sum of your standard deduction and exemption(s) is not taxable, the IRS doesn’t require you to file a return in years that your gross income doesn’t exceed that amount.
What this means is that if your gross income is less than your standard deduction and personal exemption(s) combined, you are not required to file a federal tax return because you have no income to tax. For the 2014 tax year, for instance, a single person who has less than $10,150 gross income or a married couple with less than $20,300 gross income will have NO taxable income and will not be required to file a 2014 tax return come spring 2015.
You may be required to file for other reasons, however, or you may want to file even if your income is below the filing requirement. For instance, if you’re self-employed, you have to file to pay your self-employment tax. Likewise, if you have certain types of income, you may have to file. On the other hand, if you’re due a refund of money withheld during the year, you’ll obviously want to file.
Regardless of why you file your return, if you’re uninsured but your income is below the filing requirement threshold, according to the government, you will be exempt from the penalty for being uninsured. As posted toward he bottom of the exemptions page at HealthCare.gov:
If your income will be low enough that you will not be required to file taxes:
- You don’t need to apply for an exemption. This is true even if you file a return in order to get a refund of money withheld from your paycheck. You won’t have to make the shared responsibility payment.
While this low-income exemption from the Individual Responsibility Payment may only apply to a very small percentage of US citizens, it’s a relief that those who find themselves in the position to qualify won’t be penalized for being uninsured.