Obamacare: half of those who received subsidies got too much money and will have to pay the IRS

 H&R Block is estimating that up to half of those who received subsidies under Obamacare got too much money and as a result will get lower returns then expected while some may end up owing the IRS money.

  The problem seems to be that when subsidies are calculated they use prior year tax returns to estimate future revenue to determine the amount a person is eligible for, so if a person earned more money in 2014 than in previous years they most likely received too much money and will have to pay it back.

  Here is more:

As many as 3.4 million people who received Obamacare subsidies may owe refunds to the federal government, according to an estimate by a tax preparation firm.

H&R Block is estimating that as many as half of the 6.8 million people who received insurance premium subsidies under the Affordable Care Act benefited from subsidies that were too large, the Wall Street Journal reported Thursday.

“The ACA is going to result in more confusion for existing clients, and many taxpayers may well be very disappointed by getting less money and possibly even owing money,” the president of a tax preparation and education school told the Journal.

 But the subsidies are based on past tax returns, so many people may be receiving too much, according to Vanderbilt University assistant professor John Graves, who projects the average subsidy is $208 too high, the Journal reports.

    The average is only $208 but there are those who will be owing more and it really does not matter what the amount is because this shows us the system is flawed. And if you are one of those who is eligible for subsidies every dollar matters.

  Here is what the IRS had to say:

“As always, taxpayers are responsible for the accuracy of the information on the tax returns that they sign,” an IRS spokesman told the Journal.

  That is of course true but the information which was used was based on what we can assume is accurate information because their prior tax returns were used to determine the subsidy amount, they cannot possibly accurately estimate future earnings in many cases.

  This is not going to change anytime soon unless the system is changed and I do not know any other way the subsidies can be determined so it looks like  this will be the new norm.