If deemed unconstitutional, refunds for taxes paid related to the ACA legislation may be available for those who paid into it. These taxes include the additional Medicare Tax (0.9%) and the Net Investment Tax (NIIT) (3.8%). These taxes are assessed for high-income taxpayers whose income exceeds certain thresholds.
What Does This Mean?
Though the likelihood of the ACA being overturned is considered low, it is recommended that you consult with your tax professional. They will determine if you would be eligible for a refund, and if so, assess what the best course of action is, based on your specific situation. The recommended actions vary greatly among tax professionals. Some CPA firms are filing a protective claim letter on behalf of their clients. Other firms are preparing amended returns. Other tax professionals recommend taking no action at this time. It is possible that if the ACA is overturned, the IRS would not refund the ACA tax retroactively.
What Do I Do?
Protective claims are not available for tax years 2015 and earlier. This is because the three-year statute of limitations has passed. Taxpayers who filed their 2016 tax returns on the October 15, 2017 deadline (through an extension) will have until October 15, 2020 (or 3 years from the date they filed, if earlier than October 15) to file a protective claim for a refund of the 2016 taxes related to the ACA.
