ACA 2% Penalty Pro Rated?

[Crank]

Ive recently run into a few clients who have to pay the 2% penalty but they only lacked coverage for 3 & 4 months.  I dont see anywhere on the forms, or have read anywhere, that the penalty is pro rated.  Seems strange to have the full 2% penalty when they had coverage for the majority of the year.  Any help is appreciated!

[Crank]

In ATX, even though I completed worksheet A showing the months without insurance,on the SRP questions, section section 4 line 8 defaulted to that I was not required to complete worksheet A.  I had to over ride the question to yes to get it to pro rate the penalty.  Did I do something incorrect?  Anyone else have this issue in ATX?

[Jack from Ohio]

The penalty is NOT PRORATED. 

[Crank]

Then why does worksheet A require you to select the months that the taxpayer didnt have insurance?

[Crank]

• The penalty is pro-rated for the number of months you were without health insurance, but there is no penalty for a single gap in coverage of less than 3 months during each year.

http://obamacarefacts.com/obamacare-individual-mandate/

[Jack from Ohio]

Let me know how it works out trying to pro-rate it.  The link you provided is not from the IRS.  Do as you think best.

[grmy2h]

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

"The annual payment amount is either a percentage of your household income in excess of the return filing threshold or a flat dollar amount, whichever is greater.  If you have coverage or an exemption for only part of the year, you will prorate your payment for an amount less than the annual payment. The amount you will have to pay may be limited depending on your circumstances."

[Crank]

9 hours ago, grmy2h said:

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

"The annual payment amount is either a percentage of your household income in excess of the return filing threshold or a flat dollar amount, whichever is greater.  If you have coverage or an exemption for only part of the year, you will prorate your payment for an amount less than the annual payment. The amount you will have to pay may be limited depending on your circumstances."

Thank you for the link!  I could not find anything from the IRS that stated this until you provided it.  Now the question is why ATX needs a question on the SRP to be over ridden to get the amount to pro rate.  I,m surprised no one has raised this question about ATX at this point in the tax season

[Abby Normal]

SRP question 3 should be answered Yes. But that only applies if there is an affordability exception.

[grmy2h]

I don't use ATX so I can't speak to what to do with it.  Try to work through the worksheets starting on page 12 in the instructions for form 8965.

https://www.irs.gov/pub/irs-prior/i8965--2015.pdf

[grmy2h]

13 minutes ago, grmy2h said:

I don't use ATX so I can't speak to what to do with it.  Try to work through the worksheets starting on page 12 in the instructions for form 8965.

https://www.irs.gov/pub/irs-prior/i8965--2015.pdf

it's page 14. 

[Crank]

25 minutes ago, Abby Normal said:

SRP question 3 should be answered Yes. But that only applies if there is an affordability exception.

Thank you very much! That was my problem.  After changing Q3 to Yes it allowed the penalty to be pro rated without the need to override the question I mentioned above.  This whole ACA is quite complicated.