If you barked at your tax preparer because a government subsidy overpayment took a big bite out of your refund, it's time to apologize. You had lots of company.
Tax preparer H&R Block took a look at taxpayer filing outcomes and said two-thirds of taxpayers who received a premium subsidy for health insurance had to give some back. The average: $729.
About a quarter of those receiving subsidies got money back because they'd overpaid, H&R Block said. Average kickback was $425.
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The news underscores the difficulty both government officials and consumers encountered when attempting to estimate 2014 income, on which the subsidy was based. Very few taxpayers correctly estimated their incomes, the IRS has reported.
Other findings from H&R Block's analysis:
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Bronze plan-covered individuals experienced the lowest incidence of repayment because the lower premiums of bronze plans eased the income estimate process. Bronze plan taxpayers received the lowest average premium tax credit, $890 for the year.
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The average "shared responsibility payment" for those who chose not to select exchange coverage was $178. Many taxpayers, especially young people, chose to pay the penalty because it was substantially lower than most plan annual premiums.
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96 percent of those who qualified for and filed for a penalty exemption (IRS Form 8965) claimed a tax return exemption instead of one using the marketplace exemption process. Taking an exemption saved taxpayers penalties averaging $120.
"This season saw general ACA-related confusion, incorrect or delayed 1095-A information documents, and overall anxiety regarding refund impacts," said Mark Ciaramitaro, vice president of H&R Block health care and tax services. "With many taxpayers now receiving coverage documentation, more taxpayers who will experience APTC reconciliation and the doubling of penalties, unfortunately we should expect taxpayer anxiety and confusion to continue next year."
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Dan Cook
Dan Cook is a journalist and communications consultant based in Portland, OR. During his journalism career he has been a reporter and editor for a variety of media companies, including American Lawyer Media, BusinessWeek, Newhouse Newspapers, Knight-Ridder, Time Inc., and Reuters. He specializes in health care and insurance related coverage for BenefitsPRO.
