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  • Writer's pictureVinicius Adam

Abundance of Caution: Why You Should File a Protective Refund Claim related to the Affordable Care

The United States Supreme Court has agreed to hear Texas v. U.S. in October 2020, a case that joins twenty states with Texas challenging the constitutionality of the Affordable Care Act (ACA).

If the SCOTUS finds certain parts of the ACA is unconstitutional, there could be tax refunds available.

The catch: the deadline for filing refund claims is July 15, 2020.

The taxpayer, in order to maintain the right to a refund, should file a Protective Refund Claim in anticipation that the Court may rule to strike down the ACA. The potential basis for declaring the ACA unconstitutional is a direct result of the 2017 Tax Cuts and Jobs Act eliminating the penalty in the ACA that caused the SCOTUS to declare the ACA was a tax in 2012, and, therefore constitutional.

The Medicare tax tax on earned income of $200,000 or $250,000 (single or married filing jointly, respectively) or more is a 0.9%. The amount paid for these taxes can be found on Form 8959. An additional 3.8% was imposed on net investment income for taxpayers making more than $200,000 or $250,000, again single or married filing jointly. You can find the amount of NII you paid on Form 8960.

High net worth individuals that paid significant amounts of these taxes on their 2016 tax returns may want to consider filing a Protective Refund Claim for the 2016 tax year.

If you need help navigating through any of these issues or have general questions regarding the ACA, TCJA, or your right to a refund, schedule an appointment here.



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