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Obamacare Tax Returns makes the preparation of tax returns more difficult for US expats with it’s Orwellian sounding “individual shared responsibility provision”.

Many people are not aware that Obamcare is essentially part of the U.S. tax code.  One of the core issues is that U.S. citizens are mandated to have qualifying health insurance.

Foreign insurance does not meet the requirements to be considered qualifying. On November 5th the IRS updated its publication “Questions and Answers on the Individual Shared Responsibility Provision”  On this page it makes two main points about the exemption for living abroad.

1).  If you qualify for the foreign earned income exclusion by using either the physical presence test (Out of the United States for 330 days) or the bonafide residence test (permanently resident in a foreign country) for the entire year are treated as exempt from being covered by qualifying insurance.

2).  For individuals who were out of the country for part of the year it is possible to qualify for an exemption of a short coverage gap.  However the “exemption provides that no shared responsibility payment will be due for a once-per-year gap in coverage that lasts less than three months”  Thus the part year issue is still a bit.

Now while the rules state that an expat may be exempt from the mandate, the mechanics of how to do this are still unclear.  This is especially true for expats who use the Foreign Tax credit method rather than the foreign earned income exclusion to reduce their U.S. tax liability.

The end result is that while doing taxes as a U.S. expat has always been complex the reality of the situation is that for the 2014 tax year, Obamacare has made the returns even more complex.  

If you are attempting to do the taxes yourself make sure that you exercise due care and that you do not miss the forms that report that you are exempt form the mandate (the forms are yet to be released).  However it is advisable that you consult with an expat tax professional in order to make sure that the exemption is properly reported.

– Article by Thomas Carden. JSM. EA –

The implications of the requirements of “Obamacare” on US Expat Tax Return preparation and filing are not yet fully understood, however the team have been fully briefed with all information available and have the requisite knowledge to;

  • Provide up to date, relevant and accurate advice specific to your needs
  • Accurately incorporate these requirements in the annual tax return preparation process

Contact our specialists here for help understanding Obamacare’s implications on your tax return.