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We’re now starting to get some idea of how the health care penalty tax will be applied on uninsured taxpayers. The levy will take effect in 2014 and will be collected on tax returns for 2014 that are filed with the IRS in 2015. The fee is the greater of $95 or 1% of income above the amount that triggers the requirement to file your return. The fee can be no greater than $285 for 2014. However, the penalty will increase dramatically in years after 2014. If you are obligated to pay the fine and don’t you can be hit with liens and levies by the IRS. If your children are subject to the law and you claim them as dependents on your tax return you will owe the fee.

Who is exempt from the levy? Taxpayers with household incomes below the threshold for filing a tax return are exempt. Also, if you have no health insurance coverage for less than three consecutive months you are exempt, and if your insurance is unaffordable because the health premiums are greater than 8% of your household income you are also exempt