Limbaugh’s Brilliant Plan to Dodge Insurance Tax

Rush Limbaugh has a brilliant plan to help people evade the tax penalty for failing to buy health insurance under the Affordable Care Act. If you just make sure you pay taxes rather than getting a refund, the IRS won’t be able to collect the tax.

Conservative commentator Rush Limbaugh says he’s discovered a sure-fire way to skirt Obamacare’s penalties for failing to obtain health coverage next year – but you’d have to give up a fat tax refund.

The fine for failing to obtain insurance under the so-called “individual mandate,” which starts at $95 or one percent of taxable income next year, will automatically be collected by the IRS from tax refunds. But if you make sure you don’t get a refund, the agency won’t be able to collect the penalty, Limbaugh told listeners.

“[I]f you structure your taxes so that you do not get a refund, you do not have to buy insurance and you do not have to pay a fine ‘cause they can’t collect it from you if you don’t have a refund due — and that is just another nail in the coffin of Obamacare imploding on itself,” Limbaugh said on his show Thursday night, according to a transcript.

Genius. Pure genius. If you just make sure to pay the government more money than you have to so you don’t get a refund, you won’t have to pay the government for failing to get health insurance. Except those tax penalties do build up over time and they carry interest, which means you’ll have to make sure you never get a refund again. And the winner of the Cutting Off Your Nose to Spite Your Face Award goes to…

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What Are Your Thoughts?leave a comment
  • D. C. Sessions

    Or you could move to Costa Rica to get away from the United States’ Marxist health system.

  • http://www.electricminstrel.com Brett McCoy

    Wait… is Rush saying you just have to pay the government more money so you don’t have to pay the government more money?

  • Doug Little

    [I]f you structure your taxes so that you do not get a refund,

    Good luck with that.

  • Randomfactor

    No, he’s saying you should completely adjust your withholding so that it comes out EXACTLY EQUAL to the amount you owe (including the penalty) then they can’t collect the penalty that you’ve already paid because you haven’t overpaid your tax (including the penalty.) It’s fucking brilliant! I think. My head hurts.

  • Melvosh

    Now now, this makes perfect sense. You just have to structure your taxes so you still pay taxes, but pay less than the penalty. Then you’re still making money! I’m sure it’s very easy to do, and it should only take your accountant 10-12 hours at $100/hr to make this happen.

  • http://en.uncyclopedia.co/wiki/User:Modusoperandi Modusoperandi

    See? Rush Limbaugh doesn’t have health insurance, and neither should you! You don’t need it. It’s silly to have it. Just use the ER. Or die. Either way, both you and Rush don’t have health insurance, don’t want health insurance and don’t need health insurance. And this is your chance to stick it to the Democrat party in DC! “Take that, Democrat party in DC!”, you’ll say, as you’re waiting in the ER, “Take that!”

    [Correction: Rush Limbaugh has health insurance. Because he’s no fool. Now back to our regularly scheduled programming…]

    Remember, Obamacare is socialism.

    Coming up next on KWUT, The Early Bird Special. Soft hits, soft food and conversations about how much better things used to be. On today’s show, “the War”, when kids respected their elders and ice cream tasted like ice cream, damn it!

  • raven

    What happens if you successfully build up a multiyear interest accrueing debt to the federal goverment?

    And then turn 62 or 65 and start collecting Social Security?

    Will the feds take your debt out of your Social Security? It’s a brilliant plan. Just when you need money, you have to start paying off another debt.

  • unbound

    Actually, to avoid a refund, you have to pay less in pre-paid taxes. I assume you’d have to be perfect in your assessment, which is something I haven’t been able to do ever as a single-income, married with kids tax payer.

    Even if you were able to accomplish that dubious feat, all it will really do is result in a letter from the IRS roughly 6 months later stating that you underpaid your taxes and the penalties and interest are now accumulating.

  • regexp

    Which completely ignores the fact that the IRS and various states Dept of Revenue can just go after your paycheck directly and cut you out of the loop.

    I once had the MN Dept of Revenue deduct from my paycheck $96 (in two installments of $48 – how nice of them) over a minor tax error they made. They eventually corrected it and they ended up paying me roughly $1k. Didn’t get the interest on the money they owed me or the $96 they deducted from my paycheck.

  • Dave, ex-Kwisatz Haderach

    As I understand it, my taxes are child’s play to prepare compared to those of an American in a similar financial situation. And I don’t understand them enough to manipulate the outcome in the slightest. So he’s also suggesting that you hire an expensive accountant who understands tax preparation to ensure that the government doesn’t give you a refund, which (if you are like me) you desperately need. Why does anyone listen to someone who so thoroughly fails to understand how they live?

  • raven

    Which completely ignores the fact that the IRS and various states Dept of Revenue can just go after your paycheck directly and cut you out of the loop.

    My understanding of the ACA tax is that they have ruled that out as well as raiding your bank accounts. They won’t go after you, just keep track of how much you owe them.

  • Drew

    You can also set up your withholdings to be less than your actual taxes and pay the balance when you submit your return. Many finance people suggest doing this since you can put the money in a bank account and accrue interest on the money before you pay it to the government (who doesn’t pay you any interest on a tax refund).

    He seems to be suggesting to do this. His thinking seems to be that the penalty isn’t a line item on the actual return, but is instead applied after you file and is withdrawn from any refund you may be getting. Even assuming this is correct, the penalty would almost certainly be applied to your next year’s return (with interest), or they’d send back an amended return to you which includes the penalty and requires you to pay it the same year.

  • jamessweet

    I think this is actually not crazy or stupid, it’s just douche-y. And in fact, I might not even classify it as particularly douche-y if the context were different (i.e. if it were a tax tip for people who had already decided for one reason or another not to get health insurance, rather than an exhortation to try to get people not to purchase health insurance under the ACA).

    If what other commenters are saying is correct, the government has basically said that they are not going to aggressively pursue payment. So if you don’t have a tax refund, then they probably aren’t going to bother to collect it. If that is true, then Rush’s “advice” makes sense, as far as it goes: Ideally, you *should* structure your tax payments so that you have no refund anyway, and instead pay the government a very small amount of money. (Contra what some other commenters have said, if it’s less than $1000 [IIRC — it may be some other similar number] then there is no penalty, you just pay them what you owe them at tax time) A tax refund is in essence an interest-free loan to the government. (To be clear, I pass no judgment here: I am totally shitty with money, and so always overpay on taxes lest I get royally fucked on tax day. I’d rather give the government an interest-free loan and lose a few bucks, than risk screwing up the math and not being able to pay my taxes. But that’s only because I suck with money)

    And contra Melvosh at #5, for most people this should not actually be that difficult (again, if you don’t suck with keeping track of money the way I do). If you have a constant income, and do all the math right, you should be able to estimate your taxes in advance pretty precisely.

    Assuming you are good at managing money, then, this plan would indeed save you some small amount of money (your “refund” is there all year earning interest, rather than in the government’s pockets) while also avoiding the ACA opt-out penalty. Again, it’s totally douche-y to be telling people this is a good idea, or that they should do it as some kind of statement — the vast majority of people SHOULD have health insurance! But as far as I can tell, it’s not incorrect.

  • jamessweet

    Actually, to avoid a refund, you have to pay less in pre-paid taxes. I assume you’d have to be perfect in your assessment, which is something I haven’t been able to do ever as a single-income, married with kids tax payer.

    Even if you were able to accomplish that dubious feat, all it will really do is result in a letter from the IRS roughly 6 months later stating that you underpaid your taxes and the penalties and interest are now accumulating.

    I know people who have done it, or at least come within $100. Not for any kinda of douchebag reasons like Rush suggests here, but simply to avoid giving the government an interest-free loan. There’s no penalty as long as you are close.

  • raven

    The Obamacare Penalty: Yes, It Can Be Avoided

    By Lisa Scherzer | Yahoo Finance – Fri, Oct 25, 2013 1:13 PM EDT

    The law also prohibits the IRS from using liens or levies to collect any “payment you owe related to the law, if you, your spouse or a dependent included on your tax return does not have minimum essential coverage,” according to the IRS. That means the IRS cannot go into someone’s “checking accounts anyway and just take the money,” as one of Limbaugh’s callers suggested the Obama administration might just do.

    FYI.

    The same article says that the IRS has 10 years to collect. Whatever that means. It could mean that you can only accrue 10 years worth of tax penalties.

    The article didn’t say anything about deducting it from Social Security. That may happen but may not. It’s an unknown right now. A wild guess is they might not be able to do that. The IRS and SS are different government agencies.

  • Mr Ed

    A better idea, go full Rand. All conservatives should just shrug and stop earning all together. Deprive the usurper of your income taxes. Viva day time TV

  • roggg

    So…if I understand, Rush’s plan to not pay the fine is to just…umm..not pay it? After all, if the government isn’t able to simply deduct it from your tax refund, I’m sure there’s no other recourse they can turn to to collect a debt.

  • MyPetSlug

    It’s brilliants in a way. Try to get enough people to sabotage the system with pure obstinance and then complain the system isn’t working.

    But I’m trying to imagine those people listening to Rush, doing this out of pure partisan hate. Since you can’t signed up for health insurance outside of the open enrollment period, if you have even a minor medical condition, it’s going to cost you way more then the stupid penalty you would’ve had to pay. And if you have a serious health condition, hello bankruptcy. Yes, this is truly cutting off one’s nose to spite your face.

  • skepticaleye

    I have my taxes under-withheld by approximately $500-$1000 each year. I pay the balance when I submit my tax return in April and I’ve never been assessed an under-withholding penalty. I’m in the “don’t give the government an interest-free loan” camp.

  • http://www.pandasthumb.org Area Man

    I really don’t get this. Is the penalty assessed on your tax form not simply tossed in with the taxes owed and subtracted from the taxes already paid? How is the IRS supposed to keep this money separate from everything else that you owe?

    If you really want to avoid the penalty, the surest method is to lie and claim that you’re insured.

  • alwayscurious

    Reason #21 why Limbaugh’s plan is awesome: Tax law NEVER changes, so the IRS could never collect the balance you’d owe them, ever!

    /sarcasm

  • caseloweraz

    I think Mr. Ed has the right idea. Republicans should all quit their jobs, spend out their savings and then declare bankruptcy. Hey course, lots of them will lose their houses, maybe their cars, or get evicted from the places they’re renting. But that’s a small price to pay for ideological purity.

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