Understanding the Importance of Tax Filing for Your Parents in the USA

Many friends believe that their parents do not need to file taxes in the USA if they aren’t employed or do not have an income. However, that’s a common misconception! In reality, if your parents have any self-employment income (such as babysitting, cleaning, or managing properties), or receive small amounts of interest, part-time income, or rent, they can benefit greatly from filing taxes and applying for ACA healthcare coverage. 💰💊

Example Scenario: Health Insurance Benefits

Consider a couple in their 60s with a combined annual income of $30,000 (comprising $10,000 from self-employment and $20,000 from other sources). They fall just above the 138% Federal Poverty Level (FPL), allowing them to maximize their healthcare tax credit. After filing their taxes:

• Their federal income tax amounts to nearly $0.
• They only need to pay approximately $1,400 in self-employment tax (similar to paying Social Security).
• Most importantly, with tax records, they can apply for Obamacare (ACA) subsidies!

If they do not file taxes and choose to purchase insurance directly as a couple in their 60s, the minimum monthly premium would be around $1,500. However, reporting an income of $30,000 could qualify them for approximately $2,435 in tax credits, potentially reducing their insurance premium to almost $0 for standard plans and less than $200 for more comprehensive coverage!

Three Hidden Benefits of Filing Taxes

1. Legally Obtain Healthcare Subsidies (Premium Tax Credit)

For couples earning around $30,000, applying for an ACA plan through Healthcare.gov after filing taxes can lead to low monthly premiums—sometimes just a few dollars or even free! If they choose not to file taxes, the system won’t verify their eligibility, resulting in a loss of potential subsidies. ❌

2. Accumulate Social Security Credits

The self-employment income tax paid contributes to their Social Security accounts, meaning they could qualify for retirement benefits in the future. It’s like helping your parents build their years of Social Security coverage! 🪙

3. Establish U.S. Tax Records for Future Benefits

Many immigrant parents will need tax records when applying for identity, loans, or government benefits (like Medicare and housing assistance) in the future. 📄

Upcoming Policy Changes to Keep in Mind

Starting in 2026, there will be new policies requiring that the estimated income reported for healthcare applications is consistent with the actual tax filing. Attempting to underreport income could lead to the forfeiture of any tax credits received. It’s crucial not to miss out on significant benefits in pursuit of minor savings!

Final Thoughts

Helping your parents file taxes isn’t just about paying taxes; it’s about ensuring that they are recognized and protected within the American system. ❤️ If you need guidance with this process, feel free to reach out for assistance! #AmericanHealthcare #Obamacare #InsuranceBroker #WashingtonHealthcare #HealthInsurance