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how to claim the health insurance penalty exemption for USVI residents?

 
fdr
 fdr
(@fdr)
Trusted Member

OK, since I cannot buy a health care plan as an individual here in the USVI, and this tax year the federal government is starting with penalties for not doing so -- how do I claim exemption from this penalty on my taxes?

Here's the page that lists exemptions: https://www.healthcare.gov/fees-exemptions/exemptions-from-the-fee/

The 8% rule might apply to me, but I don't know -- because what I would theoretically purchase doesn't even exist!

Anyone have a LOCAL tax advisor that knows about this issue?

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Topic starter Posted : December 28, 2014 9:14 pm
speee1dy
(@speee1dy)
Expert

we do not partake of the aca so why would you need to pay a penalty unless you were in the states 6 months or more?

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Posted : December 28, 2014 9:27 pm
Cpgrouper
(@Cpgrouper)
Active Member

So how does the health care sysytem work in the USVI? The only way to get insurance is to work for a company that provides it workers with the option?? thanks!!

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Posted : December 29, 2014 4:13 pm
vicanuck
(@vicanuck)
Expert

You will file your personal income taxes in the USVI as a resident and will therefore be exempt.

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Posted : December 29, 2014 4:38 pm
fdr
 fdr
(@fdr)
Trusted Member

Thanks, vicanuck. My understanding is that this tax penalty will be a line on the 1040 that we file - which is the same form we use, even though we turn ours in locally - so I wasn't sure what VI residents were supposed to do. Maybe it's not going to be on the 1040? I guess we will find out.

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Topic starter Posted : December 29, 2014 9:32 pm
MissJustice
(@MissJustice)
Trusted Member

The same way you claim the exemption in the states.

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Posted : December 30, 2014 4:27 pm
fdr
 fdr
(@fdr)
Trusted Member

MissJustice, the point is, I would qualify for (and would love to purchase) an individual health care plan, such as is available in the states. But no such plan is available for me as a VI resident. Since it doesn't exist, I have no idea whether its cost would fall above or below the 8% income threshold, and hence my initial question.

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Topic starter Posted : December 31, 2014 6:39 pm
STXBob
(@STXBob)
Trusted Member

On IRS Form 1040 for Tax Year 2014 http://www.irs.gov/pub/irs-pdf/f1040.pdf , in the Other Taxes section, on line 61, it wants a dollar amount for "Health care: individual responsibility (see instructions)".

Since the USVI is not participating in the ACA the way that the states are, I'm making an educated guess that you would put a zero in line 61. I don't see how we'd owe a tax for failing to have health insurance, when most individuals here can't buy it.

Here are the 1040 draft instructions, if anybody wants to study it further: http://www.irs.gov/pub/irs-dft/i1040gi--dft.pdf

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Posted : December 31, 2014 10:14 pm
MissJustice
(@MissJustice)
Trusted Member

What I meant was that you file the health insurance exemption form like statesiders. I guess we would fill out that we are not residents (of the United States), but rather territorial colonists.

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Posted : January 1, 2015 10:15 am
CruzanIron
(@cruzaniron)
Expert

fdr, don't worry about it. As several knowledgeable posters have said, the law does not apply to VI residents filing taxes in the VI.

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Posted : January 1, 2015 2:49 pm
Jim Dandy
(@jim_dandy)
Trusted Member

Just remember if you choose to report your world wide income as taxable in the USVI you need to file an IRS Form 8938 with the IRS.

Also if you have self employment income in the USVI check with an accountant on how to handle it. Under no circumstances do you want to include self employment taxes with your return filed in the USVI. The funds must be sent directly to the US Treasury reporting them using a form 1040SS in addition to filing a 1040 with the USVI.

You will need to use an accountant located in the USVI as most US accountants/ tax preparers are not familiar with the unique situation of living in a US Territory. Also in the past computerized tax preparation software has not handled the unique situation of earning income in the USVI.

Do it correctly for mistakes made are sometimes difficult if not impossible to get fixed in the USVI. I still have issues with the BIR regarding my 2006 return. I finally hired a lawyer in 2010 to see if they could solve the problem. Nothing has happened or probably ever will.

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Posted : January 2, 2015 2:27 pm
MissJustice
(@MissJustice)
Trusted Member

fdr, don't worry about it. As several knowledgeable posters have said, the law does not apply to VI residents filing taxes in the VI.

Please ignore the rude reference to knowledgeable posters. Your question was not whether you need to file it but how to file it. If you lived in the states for some portion of the year, you will be asked for that form if you were there for more than 3 months this calendar year. You will need to file that form for that portion of your stateside income.

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Posted : January 2, 2015 6:13 pm
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