Tax Dictionary – Shared Responsibility Payment
The individual shared responsibility provision of the health care law requires you, your spouse if you file a joint return, and your dependents to have qualifying health care coverage (minimum essential coverage), qualify for a health coverage exemption, or make a shared responsibility payment when filing your federal income tax return. The annual payment amount is either a percentage of your household income in excess of the return filing threshold or a flat dollar amount, whichever is greater.
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If you did not have health care coverage that meets the criteria for minimum essential coverage or qualify for an exemption (for example, you filed for bankruptcy, were evicted or your home was foreclosed, you were homeless, experienced a natural disaster, etc.), you will need to calculate your shared responsibility payment when you file your tax return. For 2017, the payment is a flat fee of $695 or 2.5% of household income (whichever is greater) less the filing threshold which is $10,350 for 2017 for a single individual. The family maximum payment for 2017 is $2,085.
Note that household income includes income from all family members claimed on the tax return including dependents.
If you are not required to file a tax return because your income is below the filing threshold, you are automatically exempt for that year.
If you are unable to pay the shared responsibility payment (SRP) in full when you file your return, you can request an installment agreement to make monthly payments on the balance due. There are no failure to pay penalties for not paying the SRP by the due date and the IRS cannot file a lien or levy for an unpaid SRP balance. However, failure to pay penalties will still apply to any non SRP portion of an unpaid balance you cannot pay by the due date.
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