Toney’s Tax Tips: October 2015

"You have an unpaid shared responsibility payment for 2014.
Amount due: $2,344.00"

The above notice from the IRS was received by this family for their shared responsibility payment for 2014, which was 1% of their income. A $2,344 penalty for not having insurance coverage in 2014 is bad enough, but the sobering reality is that if this couple remains uninsured in 2015 the penalty will increase to 2% of their income, and if they stay uninsured in 2016 the penalty will increase to 2.5% of their income.

How is the actual shared responsibility payment computed?

True, it's your choice whether or not to have health care coverage. Instead of being surprised at tax preparation time, it's important that the decisions we make about health care coverage ahead of time are made with the full understanding that the shared responsibility payment could be considerable, and will increase each year.

As a followup to my post regarding parents teaching their children how to manage money and pay taxes, the following questions are for parents to ponder:

Do your children know how to fill out a tax return or what they need to do to comply with local tax laws?
Do they know how to use credit responsibly?
Can they budget their income and then live within their means?
Have they felt the pleasure that comes from acquiring an item that they bought with money they earned?
Have they experienced the even greater pleasure that comes from giving of their time and resources to help others

Without a doubt, teaching children financial responsibility takes time and considerable effort. But the rewards are well worth it.