The media is a gun. And they’re going to blow your brains out.
The Huffington Post (and Talking Points Memo) don’t understand taxes. This matters because the people who might be informing you about politics don’t even have a grip on the most basic government operations.
Matt Drudge, the mastermind behind Drudge Report, tweeted:
Just paid the Obamacare penalty for not ‘getting covered’… I’M CALLING IT A LIBERTY TAX!
— MATT DRUDGE (@DRUDGE) March 21, 2014
What is Drudge talking about? Drudge is self-employed; he has to pay the government for 2013 taxes and 2014 taxes by April 15th. Drudge has declined healthcare, so he has to pay a premium for it in 2014. The 2014-ES form for individual states this clearly:
When you file your 2014 tax return in 2015, you will need to either (1) indicate on your return that you and your family had health care coverage throughout 2014, (2) claim an exemption from the health care coverage requirement for some or all of 2014, or (3) make a payment if you do not have coverage or an exemption(s) for all 12 months of 2014.
Drudge sent in two payments. He sent in his last payment for all of 2013 and he sent in his first payment for 2014 taxes (which are due April 2015). That 2014 tax payment is required for business owners or else they face fines. How did Drudge calculate his tax for opting out of healthcare? He likely used this online IRS overview to come out with an estimate. Here is what that the IRS says to do:
…If you do not maintain coverage and do not qualify for an exemption, you will need to make an individual shared responsibility payment with your return. In general, the payment amount is either a percentage of your income or a flat dollar amount, whichever is greater. You will owe 1/12th of the annual payment for each month you (or your dependents) do not have coverage and are not exempt. The annual payment amount for 2014 is the greater of:
- 1 percent of your household income that is above the tax return threshold for your filing status, such as Married Filing Jointly or single, or
- Your family’s flat dollar amount, which is $95 per adult and $47.50 per child, limited to a maximum of $285.
The individual shared responsibility payment is capped at the cost of the national average premium for the bronze level health plan available through the Marketplace in 2014. You will make the payment when you file your 2014 federal income tax return in 2015.
This is what a White House official said about it on Twitter:
Talking Points Memo said he was “probably lying” about the tax. And notes: “The Obama administration doesn’t currently have a mechanism for accepting individual mandate payments, which are separate from income taxes, and the exact penalties have not yet been determined…” Of course: that mechanism is outlined above and on the IRS website. But even if there wasn’t a mechanism, you still need to take this into account in your estimate to avoid underpaying and possibly then receiving a fine.
Huffington Post writes: “The mandate penalty nevertheless is separate from income taxes and isn’t due until 2015.” Not realizing that self-employed people start paying taxes due in 2015 in 2014.
I feel crazy reading this. Am I missing something? What are these people talking about? 2014 taxes are due in 2015. Self-employed people start paying those 2014 taxes on April 15 with quarterly tax estimates. Thus Matt Drudge did what the government told him to do and now everyone is saying he lied? Even a White House official doesn’t understand this? What is going on?
The media moves fast for commercial reasons. We make mistakes. Twitter moves fast because it rewards speed; we make mistakes. But this is just a reminder: Don’t take things at face value. Think critically, even about this article.