{Insurance|Insurance coverage} {shoppers|consumers|buyers}: {Plan|Strategy} now to {trim|cut} next spring’s tax {bill|expense|costs} – Associated Press

{An unpleasant|An undesirable} tax surprise {may|might} be {lurking|hiding|prowling} next spring for some {people|individuals} who {bought|purchased} {health insurance|medical insurance} this year on the Affordable Care Act’s {coverage|protection} {marketplaces|markets}.

The {problem|issue} centers on {income|earnings}, or what {shoppers|consumers|buyers} {think|believe} they will make.

{People|Individuals} can get {help|assist} from the {government|federal government} to {buy|purchase} {coverage|protection}, {depending on|depending upon} their {income|earnings}. {{But|However} they {have to|need to} {estimate|approximate} their {income|earnings} for the coming year to {figure out|determine|find out} {how much|just how much} {help|assistance|aid} they {need|require} in the {form|type|kind} of tax credits.

| They have to {estimate|approximate} their {income|earnings} for the coming year to figure out how much {help|assistance|aid} they {need|require} in the {form|type|kind} of tax credits.

} Those who {estimate|approximate} too low– and {wind up|end up} getting more {help|assistance|aid} than they {should|ought to|must|need to}– will {have to|need to} {pay back|repay} all or part of the {assistance|support|help} at tax time.

About 3.2 million returns for 2018 {included|consisted of} {a repayment|a payment}, according to {the latest|the most recent|the current} {statistics|stats|data} from the {Internal Revenue Service|Irs}.

{Insurance|Insurance coverage} brokers see this {problem|issue} {surface|surface area} every year, and some {expect|anticipate} it to grow more {acute|severe|intense} for 2020. {Because|Since|Due to the fact that} of {job|task} losses due to the coronavirus pandemic, {many people|lots of people|many individuals} {used|utilized} the exchanges and tax credits for the {first time|very first time} to {buy|purchase} {coverage|protection} this year.

{{But|However} next spring’s tax headache can be softened with some {planning|preparation} {before|prior to} {the end|completion} of the year.

| Next spring’s tax headache can be softened with some {planning|preparation} {before|prior to} the end of the year.

}”If they wait till April to figure it out, then there’s {no time|no time at all} to do anything,” {said|stated} Emily Bremer, a St. Louis-area broker.

Here’s what Bremer and others {recommend|suggest|advise}.

{CHECK|INSPECT|EXAMINE} YOUR {MATH|MATHEMATICS}

Compare your {income|earnings} {estimate|quote|price quote} to what you {actually|really|in fact} {earned|made}. Was your 2020 {estimate|quote|price quote} too low?

Those who make {between|in between} 100% and 400% of the federal {poverty level|poverty line} can get some tax credit {help|assistance|aid} paying their premium. This year, 400% of federal {poverty|hardship} {amounted to|totaled up to} $104,800 for {a family|a household} of {four|4}.

Tax credit eligibility is {based on|based upon} {modified|customized} adjusted {gross income|gross earnings}, and {a lot of|a great deal of} things are {included|consisted of} {in that|because} figure. {Unemployment|Joblessness} {compensation|payment|settlement} counts {and so|therefore} do early withdrawals from {retirement accounts|pension} like 401(k) {plans|strategies}. The {summer|summertime|summer season} {job|task} {income|earnings} of any {{children|kids} or dependents|dependents or {children|kids}} {also|likewise} counts.

“{Be aware of|Know|Understand} all of your {income|earnings} sources and {understand|comprehend} how {quickly|rapidly} for some {people|individuals} you can lose all of your tax credit,” {said|stated} Eric Bronnenkant, head of tax for the {financial|monetary} management {company|business} {Betterment|Improvement}.

{People|Individuals} who {wind up|end up} {earning|making} more than 400% of federal {poverty levels|poverty line} will {have to|need to} {pay back|repay} their {entire|whole} credit, {and that|which} can {add|include} a couple thousand dollars or more to a tax {bill|expense|costs}.

Those who fall {below|listed below} the {poverty level|poverty line} {also|likewise} {should|ought to|must|need to} be {concerned|worried}.

{If your {income|earnings} {turned out|ended up} too low to {qualify for|get approved for|receive} tax credits, you {also|likewise} {may|might} {have to|need to} {pay back|repay} {some of|a few of} the {help|assistance|aid} you {received|got}.|You {also|likewise} {may|might} have to pay back some of the {help|assistance|aid} you {received|got} if your {income|earnings} turned out too low to {qualify|certify} for tax credits.} That can {happen|occur|take place} to {restaurant|dining establishment} {workers|employees} if their {employer|company} {shut down|closed down} for a long stretch due to the pandemic.

The federal government’s healthcare.gov {website|site} {offers|provides|uses} {assistance|support|help} with {income|earnings} {estimates|quotes|price quotes}.

{EXPLORE|CHECK OUT} {OPTIONS|CHOICES|ALTERNATIVES} FOR {HELP|ASSISTANCE|AID}

It’s {too late|far too late} to {adjust|change} your tax credits for 2020. {{But|However} there are still some {ways|methods} to {adjust|change} your {taxable income|gross income}.

| There are still some {ways|methods} to {adjust|change} your taxable {income|earnings}.

} {If you can, increasing contributions to work-based {retirement accounts|pension} like a 401(k) {plan|strategy} can {lower|reduce|decrease} {taxable income|gross income}.|Increasing contributions to work-based retirement accounts like a 401(k) {plan|strategy} can {lower|reduce|decrease} taxable {income|earnings} if you can.} Doing the {same|exact same|very same} for a health {savings|cost savings} account for medical {expenses|costs|expenditures} can {help|assist}.

{Look for|Search for|Try to find} last-minute {deductions|reductions}. Wichita Falls, Texas, broker Kelly Fristoe {said|stated} a rancher {client|customer} {may|might} {buy|purchase} a tractor {before|prior to} {the end|completion} of the year {partly|partially} to {create|produce|develop} {a business expense|an overhead} that {helps|assists} {push|press} his {taxable income|gross income} back {below|listed below} 400% of the {poverty level|poverty line}.

A tax {professional|expert} or {health insurance|medical insurance} broker {may|might} {be able to|have the ability to} {help|assist}.

START {SAVING|CONSERVING}

If you’re going to {end up|wind up} paying {money back|cash back|refund}, you have time to {start|begin} {saving|conserving} for that tax {bill|expense|costs} in April.

It’s {also|likewise} {a good|a great|an excellent} {idea|concept} to keep tabs of your {income|earnings} in the {new|brand-new} year.

{Fristoe {said|stated} he likes to {meet with|consult with|meet} {clients|customers} in the middle of the year to see how their {income|earnings} is {shaping|forming} up compared to what they {predicted|anticipated|forecasted} when they {bought|purchased} {coverage|protection}.|When they {bought|purchased} {coverage|protection}, Fristoe {said|stated} he likes to {meet|satisfy|fulfill} with {clients|customers} in the middle of the year to see how their {income|earnings} is {shaping|forming} up compared to what they {predicted|anticipated|forecasted}.} There{‘s enough| suffices} time at that point to {adjust|change} tax credits if {needed|required}.

“That {way|method} you {don’t|do not} get to {the end|completion} of the year and go, ‘Oh my goodness, I {need|require} to pay the {IRS|Internal Revenue Service} {how much|just how much} {money back|cash back|refund}?’,” Fristoe {said|stated}.

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Follow Tom Murphy on Twitter: @thpmurphy

Source: apnews.com