I was thinking about how the Affordable Care Act was unfolding and something occurred to me that I hadn’t thought about before. I’m just going from memory here but the way I recall it the federal government is planning to start enforcing the individual mandate this year. If they do what I suspect they will, it will reduce the income tax refund of those who haven’t gotten healthcare insurance.
Just going on averages, the average fine is presumed to be around $700 and the average income tax refund around $3,000. If the fine is deducted from the refund, that means that a good sized group of people will be getting income tax refunds that are about 25% less than they would otherwise have done.
That will be a bit of a jolt to the economy. I wonder how large a jolt?
Dave,
When I did my taxes last month, the program assumed until I got to the question on health insurance that I did not have it. When I answered the question, I went from roughly owing $1,000 to getting a refund of over $1,500. The jolt is going to be large.
It depends on how many people who don’t have insurance file income tax returns.
Or carefully adjust their w-4s But I suppose the ones without ins. will be the same ones who don’t know what a w-4 is.
BTW, what is the Govt. plan if the refund doesn’t cover the fine?