Does anyone know how income verification will work in the ACA?

[mmonk]

For instance, if someone reports no income on their tax return one year due to expenses but has monthly income such as the self-employed, what will they go with for income?

[Turbineguy]

1. It gets sorted out

on next year's tax filing. I don't know yet if there are additional penalties.

[PasadenaTrudy]

2. I'm also wondering

about people who don't file taxes. I have a friend who takes care of his mother and his brother gives him money to do this. He hasn't filed in years

[northoftheborder]

3. One can receive money as a gift without claiming it as income if it is under $12,500 per yr.-----

The amount may have gone up in the last couple of years, not sure if this fact is up to date.

[PasadenaTrudy]

5. My friend

gets around $3K a month from his brother. He is caring for mom with dementia at home full time...he is 51, mom is around 90.

[Ms. Toad]

8. Within families the IRS rule has always seemed odd to me.

There isn't any express way to deal with gift tax consequences within families (broadly defined) like - for example - parents who pay tuition for their adult child. Or unrelated adults who live together and one claims the other as a dependent. Both of those (and your friend's situation) from a literal reading of the law should trigger gift tax reporting, but I don't know of any situation in which it is actually done (or there were consequences for not doing so).

Of course, with your friend, there could easily be a caregiver arrangement set up if income would be helpful for the ACA.

[Ms. Toad]

6. Not correct.

Gift income is ALWAYS tax free to the recipient. There is no cap.

The DONOR must pay the gift tax, but can give $14,000 per year (for 2014) to as many individuals as s/he wants without having to account for it as part of his/her gift/lifetime transfer of wealth (which is subject to being taxed at death)..

That said, I don't know how the ACA deals with gifts. The rules are not necessarily the same. Medicaid (at least pre-expansion), and some other forms of government assistance, requires gifts to be reported (even though there are no taxes owed on it).

[northoftheborder]

10. Thanks for the additional info I wasn't aware of.

[Ms. Toad]

11. That's a really confusing tax concept -

In nearly every other area of money transfer, the person receiving money pays the taxes (if any are owed).

[just us]

4. Most of us file taxes

[mmonk]

9. I know. I do too.

But sometimes my taxable income is low compared to my monthly income totals on my return and I don't have W2's. I also live in a confederate state where there is no Medicaid expansion, so income below a certain level won't get subsidies. So that is why I'm interested in knowing.

[fredamae]

7. Typically Earnings are

reported to Soc Sec/IRS each quarter, I understand. So possibly they're looking at your earnings for the last 6 mos of 2012 and the first 6 months of 2013.....
This is just a guess--this is "generally" how most states use earnings to determine your UI benefits....