Question

Susan is a single taxpayer, 26 years of age, with AGI of $28,000 and no tax exempt income. She did not have minimum essential coverage for 8 months in 2017. Compute Susan's individual shared responsibility payment for 2017. For 2017, the flat annual dollar amount is $695 per adult and $347.50 per child, limited to an annual maximum of $2,085 per household.

Answer 1

Susan has to pay $695 in 2017.

Explanation:

Since Susan does not have minimum essential coverage for 8 months, She has to pay individual shared responsibility payment along with the federal tax payment she made.

Individual shared responsibility is greater of the below

2.5% of the income above exempted limit

or

flat annual dollar amount that is $695 per adult

But this should not exceed the limit of $2085 per household. Since her AGI is $28,000 and exempted amount is $9326

Therefore (28000-9326)×2.5÷100 = 466.85 annually

But she only missed the coverage for 8 months hence proportionate amount is $312.

Since the payment is the greater of the above mentioned limits she has to pay $695 per adult flat rate.