IRS Withheld the Wrong Amount? (ObamaCare)

During 2014 I was covered for two months under Obamacare.

Once I became employed I called and cancelled Obamacare because my employer offered insurance.

Fast forward to tax filing season.

I filed my taxes with no problem and just received something in the mail from the IRS stating that I now owe over $700 for not canceling the insurance even though I did. I also informed whomever was on the phone that I DID NOT receive a 1095 from Obamacare for my taxes. The are holding my tax return until this fee is paid.

The person that I tried to speak with on the phone was extremely ugly and has no place in customer service. How is this just or fair? This is stealing! The worst part is that I only had to pay a fee of $5 for my insurance. How did this turn into $700?


Answer

When you enrolled you got cost assistance based on your projected income for the year, if you made more then you may have to pay back tax credits. If this was a mistake due to you canceling your plan, but it not being canceled by the marketplace, then you need to contact the Marketplace and sort it out.

You easily claim an exemption for this, but since you need to un-owe money you owe it is going to require some more leg work. Assuming the fee is an error, and not simply you owing back tax credits due to income, there are many options for getting help.

Try the Taxpayer Advocate Service (TAS):

The Taxpayer Advocate Service (TAS) is an independent organization within the IRS that helps taxpayers who are experiencing unresolved federal tax problems. Here are 10 things every taxpayer should know about TAS:

  1. The Taxpayer Advocate Service is your voice at the IRS.
  2. You may be eligible for our help if you’ve tried to resolve your tax problem through normal IRS channels and have gotten nowhere, or you believe an IRS procedure just isn't working as it should.
  3. We help taxpayers whose problems are causing financial difficulty. This includes businesses, organizations and individuals.
  4. We’ll do everything we can to resolve your problem. And our service is always free.

  5. If you qualify for our help, you’ll be assigned to one advocate who will be with you at every turn.
  6. We have at least one local taxpayer advocate office in every state, the District of Columbia and Puerto Rico. To find your advocate:
    • Visit www.irs.gov/advocate
    • Call us toll-free at 1-877-777-4778
    • Check your local directory
    • Look at Publication 1546, Taxpayer Advocate Service – Your Voice at the IRS, which lists our offices nationwide
  7. Our tax toolkit at www.TaxpayerAdvocate.irs.gov has basic tax information, details about tax credits, and more.
  8. TAS also handles broader problems that affect many taxpayers. If you know of one of these systemic issues, please report it to us at www.irs.gov/sams.
  9. You can get updates at:
  10. TAS is here to help you because when you’re dealing with a tax problem, the worst thing you can do is to do nothing at all!

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diana pereyda on

hello, my husband and I could not afford health care, so we paid penalty for 2016 $1400. now the IRS still sends bills saying we owe $300 I sent checks for June July August $100 a month, but they say takes a LONG time before they pay, but YES they admit have the $300. Now November and still send bill!

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