Affordable Care Act for Non Residents
Published on Nov 18, 2015
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MORE DECKS TO EXPLORE
PRESENTATION OUTLINE
Affordable Care Act
for
Non Residents
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Individual Shared Responsiblilty Payments
For US Citizens Living Abroad
The 2015 filing season (for 2014 returns) will be the first one that subjects taxpayers to 'individual shared responsibility payments'. An individual shared responsibility is a charge levied on taxpayers who do not carry adequate insurance coverage for themselves, their spouse and their dependent children.
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How Much Will You Owe?
- Flat Dollar Amount, OR
- 1% of Income Above Threshold
- Whichever Is More
- There is a Minimum and Maximum
The amount of the payment will vary from taxpayer to taxpayer. The minimum is $95 per taxpayer and $47.50 per child. The maximum is $2,448 per person up to $12,240 for a family of more than four.
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Either You Are Covered,
You Are Exempt
OR
You Pay
Beginning in 2014, US citizens must either have minimum essential coverage, qualify for an exemption, or pay with their tax return. Minimum essential coverage is defined here:
http://www.irs.gov/Affordable-Care-Act/Individuals-and-Families/ACA-Individ...
http://www.irs.gov/Affordable-Care-Act/Individuals-and-Families/ACA-Individ...
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US Citizens Abroad Can Qualify As
Having
Minimum Essential Coverage
But what about US citizens who live in foreign countries? Do the provisions of the affordable care act extend to them? The answer is yes, the do apply. However, under certain circumstances, a citizen living abroad will be treated as having minimum essential coverage.
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Tests To Qualify, Either
- Physical Presence, OR
- Bona Fide Resident
The tests are the same as those that qualify a taxpayer for the foreign earned income exclusion. Those tests are the physical presence test or the bona fide residence test.
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330 Days In A
12 Month Period
The physical presence test is 330 days in a foreign country during a consecutive twelve month period. If the taxpayer meets the test, he or she will qualify for the 12 month period in question. Note – that is not necessarily a calendar year. The 12 month period can cover two tax years. This is important, because individual shared responsibility payments are assessed for any month that the taxpayer does not have minimum essential coverage.
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That Means
- Full Year Resident
- Of a Foreign Country
- You Can Travel To The US
- See IRS Pub 54
The bona fide residence test is the other way to qualify. A bona fide resident of a foreign country is one that can prove that they permanently reside in the foreign country. A taxpayer on temporary assignment overseas who maintains a home in the US and intends to return there is probably not a bona fide resident of a foreign country.
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Summary
- You Need Minimum Essential Coverage
- OR You Need An Exemption
- OR You Will Pay
- Non-Residents Can Avoid It
