It’s that time of year again when everyone must do their taxes. Of course, most people experiencing homelessness don’t file tax returns and wouldn’t suffer a penalty for not filing because they make little to no money.
Contrary to what many people believe, though, many homeless people are employed, at least part of the time. According to a 2002 national study by the Urban Institute, about 45 percent of homeless adults had worked in the past 30 days, only 14 percentage points lower than the employment rate for the general population at that time.
There are some advantages for low-income households when filling out their taxes. Low-or moderate-income households who earned an annual income less than $14,590 for single adults and $20,020 for married couples (filing jointly without dependents) will qualify for the Earned Income Tax Credit (EITC) program and can receive a maximum credit of $495 for single adults and higher amounts for households with dependent children.
A new consideration this year for people living in shelters or on the streets is the requirement under the Affordable Care Act that everyone have health insurance. If you don’t have health insurance and you don’t qualify for Medicaid, you will have to pay a fee or a “shared responsibility payment.” The good news is that almost all homeless people qualify for Medicaid. If you don’t qualify for Medicaid and are homeless you can be exempt from this requirement.
Here is some basic information and guidance on filling taxes for persons experiencing homelessness and their service providers:
- First, anyone making an annual income less than $10,150 as a single person or $20,300 as a married person filling jointly is under the threshold for filling taxes and therefore not required to file a tax return.
- In states with Medicaid expansion, all persons experiencing homelessness should qualify for Medicaid, assuming they make less than 138 percent of the Federal Poverty Level, which is $16,105 a year for single adults. (Community providers are already working hard to get everyone who’s eligible covered. People can apply anytime, even if open enrollment has ended.)
- In states that chose not to expand Medicaid, anyone making an annual income of more than $10,150 as a single person or $20,300 must file a tax return and have health insurance in order to avoid paying a penalty fee, which is either a small percent of his or her income or a flat sum, whichever is the higher amount.
- Fortunately persons who don’t qualify for Medicaid, but are experiencing financial hardships, such as homelessness, can qualify for exemptions to the health insurance mandate. There are many other exemptions that may benefit persons experiencing housing instability but who are not literally homeless.
- All that is required to establish housing status as homeless is filling out a form. No other documentation is required for establishing homelessness status. If someone applying this exemption doesn’t hear back before filing his or her taxes (or is submitting the application concurrently), the tax preparer should write “pending” on Form 8965, Part I, in the space requesting the Exemption Certificate Number.
Health insurance is important. Be sure to confirm that you or someone you are working with is not in fact eligible for Medicaid or cannot afford other types of insurance before seeking an exemption.