Bankruptcy is a very useful thing.
You may already no that it:
- Eliminate many types of consumer debt with the stroke of a pen
- Protect almost all of your assets
- Puts you on the path to rebuilding credit
But did you also know it can stop the Obamacare tax penalty for people who didn’t have health insurance?
WHAT IS THE OBAMACARE TAX PENALTY FOR PEOPLE WITHOUT HEALTH INSURANCE?
Part of Obamacare, or the Affordable Care Act, is that all Americans are required to purchase a health insurance policy.
This is called the “Individual Mandage.”
Anyone who doesn’t have health insurance must pay a tax penalty unless they have a special “hardship” going on in their life.
There are many hardships that can help people who didn’t have health insurance avoid owing taxes at the end of the year.
The tax penalty or fee is also called the Shared Responsibility Payment.
If you didn’t have health insurance for some of the months in 2018 or earlier, and don’t have a special hardship going on in your life, then you have to pay the penalty along with your taxes when you file taxes in April.
If you would get a refund normally, then the IRS will keep your refund and apply it to the Shared Responsibility Payment.
HOW DOES Filing BANKRUPTCY HELP?
The Bankruptcy Hardship Exemption is particularly useful because it works if you filed bankruptcy in the last 3 years.
This is a good law because people filing Chapter 7 Bankruptcy or Chapter 13 Bankruptcy don’t usually have much in savings to be able to afford expensive health insurance premiums.
If someone already had to file bankruptcy, why hit them with an extra tax penalty on top of the bankruptcy, right?
Even if you filed in 2016 or 2017, you can still use it to avoid owing the 2018 Shared Responsibility Payment, so bankruptcy is a very powerful thing in this respect.
WHAT HAPPENS IF I FILED BANKRUPTCY ON MEDICAL BILLS?
Even if you filed bankruptcy on medical bills, you can still claim the bankruptcy as a hardship to avoid owing the Obamacare tax penalty.
This makes perfect sense, right?
If you have to go to the doctor or to the hospital when you don’t have health insurance, then you will probably have lots of medical debt.
Medical bills are one of the most common reasons that people file bankruptcy, especially for people who are uninsured, or people whose insurance doesn’t cover the medical bills.
The idea of bankruptcy is to give people a financial fresh start. If you had to file a medical bankruptcy, and then got hit with a tax penalty right afterwards, it wouldn’t be much of a fresh start, would it?
Conclusion
If you haven’t had health insurance in 2018, and also have debt or judgments or garnishments, why not come for a free conference with Walker & Walker Law Offices, PLLC?
We can help you get out of debt and avoid owing taxes for Obamacare all in one transaction.
It’s easy! Just Contact Us at 612-824-4357 to set up your free attorney consultation.
