For those who signed up for “free” government health insurance, they are about to find the consequences of fibbing to healthcare.gov, often encouraged by their Obamacare guides.
Anyone who had the government pay for their insurance should have received a form 1095 stating the amount the government paid Blue Cross (or whomever) for the “free” health insurance. If you weren’t actually entitled to the advance tax credit or you earned more than you expected, form 8962 and its 14 pages of instruction will guide you through calculating the amount that needs to be paid back.
Just a few of the complications are if your marital status changed during the year, if you bought a shared policy and some people covered by the policy were not eligible for the credit, if you lived in a state that rejected Medicaid expansion.
Because so many people are about to get walloped with an unexpected tax liability and were under withheld, the IRS has already announced it will waive penalties.
Unfortunately the way the tax credit was set up, it still encourages people to lie – as only a portion of the undeserved tax credit is required to be repaid.