Daily Tax Update - July 25, 2014: Affordable Care Act Guidance Released

Affordable Care Act Guidance Released:  The IRS released several pieces of guidance under the Affordable Care Act (ACA) on July 24.  The IRS released final and temporary regulations (T.D. 8693) under sections 36B and 162(l), providing rules for calculating the premium tax credit and allowing married taxpayers who are domestic abuse victims to receive the credit without filing a joint tax return.  The IRS also released Revenue Procedure 2014-37 in conjunction with the temporary regulations.

The IRS also released final and temporary regulations (T.D. 9684) relating to the fee under section 9008 of the ACA imposed on covered entities engaged in the business of manufacturing or importing branded prescription drugs.  The IRS released additional guidance on this fee in Notice 2014-42.

Finally, the IRS released Revenue Procedure 2014-46 explaining the calculation of the monthly national average premium amount of bronze-level coverage under section 5000A(c)(1)(B) of the ACA.  This amount provides a cap on the tax penalty faced by households that do not obtain minimum essential health insurance coverage.  For 2014, the monthly amount is $204 per individual.

Ryan Anti-Poverty Plan Includes EITC Expansion:  On July 24, House Budget Committee Chairman Paul Ryan (R-WI), released a discussion draft of his “Expanding Opportunity in America” plan, intended to address state and federal programs for fighting poverty.  Among the principal components of the plan is an expansion of the Earned Income Tax Credit (EITC).  The proposal would double the maximum credit for childless households, double the phase-in and phase-out rates of the credit, increase the threshold at which the credit begins to phase-out, and decrease the minimum age for childless households claiming the credit from 25 to 21.  President Obama has proposed the same expansion of the EITC (with the exception that the President’s proposal increases the maximum eligibility age from 64 to 67).

The discussion draft of the plan can be accessed here.

House Passes Child Tax Credit and Education Credit Bills:  The House passed the Child Tax Credit Improvement Act (H.R. 4935) today, on a 237-173 vote.  The bill would index the Child Tax Credit to inflation and would require taxpayers to provide social security numbers to claim the refundable portion of the credit.

On July 24, the House also passed the Student and Family Tax Simplification Act (H.R. 3393), on a 227-187 vote, with 32 Democrats joining the Republic majority.  The bill would consolidate four existing education tax incentives—the American Opportunity Tax Credit, the Hope Credit, the Lifetime Learning Credit and the tuition deduction—into a single tax credit for up to $2,500 per year.