what is the point of the part b late enrollment penalty?
"The point of the enrollment penalty is basically the same as the ACA penalty.  Any sort of health insurance - or really, any insurance - is funded by creating a risk pool of high and low risk people and pricing it so that the overall payments cover the total risk.   That means, however, that on average the low risk people end up paying more than their share - more than it would have cost them, without the insurance, excepting any provider agreements to charge less (which is significant in the health insurance business).  (Of course some of them do end up using more than they pay - but not on average, assuming the risk was calculated accurately.) While there isn't really a completely low risk pool in Medicare, there is a significant difference in utilization (=cost) between younger (65-70) and older enrollees.  As such, for many health 65 year olds, it would be beneficial to not enroll in Medicare right away - delay a few years, if they're fully healthy, and wait until they are less healthy.  Since Medicare won't turn you away for pre-existing conditions, that's a risk some would take. In order to accommodate for that, Medicare effectively says, ""If you didn't help subsidize the costs of the high users when you were younger, you need to pay more to make up for that fact"" - hence the enrollment penalty.   The New York Times explains this in part in a 2006 article discussing Part D (which was new that year, and has a similar penalty): The purpose of the late enrollment penalty is to encourage people to   sign up as soon as possible, before they have significant drug costs."
Here's an answer received elsewhere. Yes, it looks like you have a pretty good understanding the concept   and the process. Your wife's income will be so low - why? If she is a full-time student in any of those months, you may   attribute $250 x 2 children worth of income for each of those months. Incidentally, even if you do end up paying taxes on the extra $3000,   you won't be paying the employee's share of Social Security and   Medicare (7.65%) or state disability on those funds. So you still end   up saving some tax money. No doubt, there's no need to remind you to be sure that you submit all   the valid receipts to the administrator in time to get reimbursed.  And a must-have disclaimer:   Please be advised that, based on current IRS rules and standards, any advice contained herein is not intended to be used, nor can it be used, for the avoidance of any tax penalty that the IRS may assess related to this matter. Any information contained in this email, whether viewed or subsequently printed, cannot be relied upon as qualified tax and accounting advice. ... Any information contained in this email does not fall under the guidelines of IRS Circular 230. Based on my experience with student tuition documents, it sounds like there is money due to you from the school.  From your description, I would guess that your statement looks something like this:  Credits: Debits: Registration  === 3,400 Lab/Classroom Fees === 600 Balance:  === -6,000 If that's the case, remember that this document is from the school's accounting system and so it is registering a negative from the perspective of the school's finances. I was able to find several references that claim that the Indo-US treaty provision is limited to five years: Here it says this (on page 20): Generally the treaty exemption for students is limited to the first   five calendar years that the international student is in the U.S.   However there is no set time limit for students from Belgium,   Bulgaria, China, The Netherlands, and Pakistan. However, I couldn't find any specific time limit neither in the treaty nor in the technical explanation. The explanation says: Thus, for example, an Indian resident who visits the United States as   a student and becomes a U.S. resident according to the Code, other   than by virtue of acquiring a green card, would continue to be exempt   from U.S. tax in accordance with this Article so long as he is not a   U.S. citizen and does not acquire immigrant status in the United   States. The saving clause does apply to U.S. citizens and immigrants. However, the treaty explicitly says this: The benefits of this Article shall extend only for such period of time   as may be reasonable or customarily required to complete the education   or training undertaken. The reason for this last paragraph is to ensure that you don't artificially prolong your student status, and the 5 year limit may come out of the interpretation of this specific paragraph. Similar paragraph exists in the US-China treaty, and the explanation for that treaty says this: These exemptions may be claimed only for the period reasonably   necessary to complete the education or training. In some cases, the   course of study or training may last less than year. For most   undergraduate college or university degrees the appropriate period   will be four years. For some advanced degrees, such as in medicine,   the required period may be longer, e.g., seven years. Based on this, it is my personal impression that if you're an undergraduate student and studying the same degree (and not, for example, finished your BA, and started your MS) - you are no longer eligible for the treaty benefit. But I suggest you ask a professional (EA/CPA licensed in your State) for a more reliable tax advice on the matter. I'm not a tax professional and this is not a tax advice. From the instructions: If you do not need to make any adjustments to the basis or type of   gain or loss (short-term or long-term) reported to you on Form 1099-B   (or substitute statement) or to your gain or loss for any transactions   for which basis has been reported to the IRS (normally reported on   Form 8949 with box A checked), you do not have to include those   transactions on Form 8949. Instead, you can report summary information   for those transactions directly on Schedule D. For more information,   see Exception 1, later. However, in case of ESPP and RSU, it is likely that you actually do need to make adjustments. Since 2014, brokers are no longer required to track basis for these, so you better check that the calculations are correct. If the numbers are right and you just summarized instead of reporting each on a separate line, its probably not an issue. As long as the gains reported are correct, no-one will waste their time on you. If you missed several thousand dollars because of incorrect calculations, some might think you were intentionally trying to hide something by aggregating and may come after you. Assuming US/IRS: If you filed on time and paid what you believed was the correct amount, they might be kind and let it go. But don't assume they will. If you can't file on time, you are supposed to file estimated taxes before the deadline, and to make that payment large enough to cover what you are likely to owe them. If there is excess, you get it back when you file the actual forms. If there is a shortfall, you may be charged fees, essentially interest on the money you still owe them calculated from the submission due date. If you fail to file anything before the due date, then the fees/interest surcharge is calculated on the entire amount still due; effectively the same as if you had filled an estimated return erroneously claiming you owed nothing. Note that since the penalty scales with the amount still due, large errors do cost you more than small ones. And before anyone asks: no, the IRS doesn't pay interest if you submit the forms early and they owe you money. I've sometimes wondered whether they're missing a bet there, and if it would be worth rewarding people to file earlier in order to spread out the work a bit better, but until someone sells them on that idea... ADP does not know your full tax situation and while the standard exemption system (actually designed by the IRS not ADP) works fairly well for most people it is an approximation.  This system is designed so most people will end up with a small refund while some people will end up owing small amounts.  So, while it is possible that ADP has messed up the calculations it is unlikely this is the cause.  The most likely cause is that approximation ends ups making you pay less tax during the year than you actually owe. A few people like your friend may end up owing large amounts due to various circumstances.  It is always your responsibility to make sure you pay enough tax throughout the year.  While this technically means that you need to do your taxes every quarter during the year to make sure you pay the correct tax during the year, for most people this ends up being unnecessary as the approximation works fine.  It is possible the exemption system failed your friend, but much more commonly people owe penalties because they put the wrong number of exemptions or had other side income. On a related note, most people in finance would argue that your situation where you owe some money at tax time, but not so much that you have to pay a penalty, is actually the best way to go.  Getting a tax refund actually means you paid more tax than you needed to.  This is similar to giving an interest-free loan to the government. The IRS allows filers to attach a statement explaining the reason for late filing.  I have had clients do this in the past, and there has never been an issue (not that that guarantees anything, but is still good to know). Generally, the IRS is much more lenient when a taxpayer voluntarily complies with a filing requirement, even if it's late, than if they figure it out themselves and send a notice. My wife and I have done a good job teaching our daughter, now 15, that one does the right thing, simply because it's the right thing to do. This may not work for every child, but it did for us. Her motivation was never punishment, we explained that if she did the wrong thing, it's awful to have to live with that.  On one hand, THEAO's answer is correct, the stick the IRS wields is the audit and fines. I suppose from a legal standpoint, we comply with laws to avoid punishment. I find this to be unfortunate. To get back on topic - I started with an answer more appropriate to Parenting because I have a very precocious child for whom I addressed this question a decade ago. The latter portion of my response helps to give tangible benefits which have value even if less than the tax you might be paying. "Hi Alex.  I've been alerted you're seeking a better answer to this question. ;-)  Please accept my apologies for not coming back to this question sooner – it got buried. :-/  No, in general you cannot make an early withdrawal penalty-free from a 403(b) account to use towards the purchase of a home. Withdrawals before age 59 1/2 are generally subject to the 10% early withdrawal penalty, on top of ordinary income tax. Some 403(b) plans may allow for a loan, but the availability and conditions vary by plan. If you'd consider a loan, you should check with your plan administrator or your plan's Summary Plan Description – often available at one's company intranet or HR web site.  (I do contract work for an HR consulting firm that assists others in building such sites, and SPDs are usually something made available for download in a ""Retirement"" or ""Wealth"" section of such web sites.) Note that a loan from a 403(b) would need to be paid back into the plan over some period of time, e.g. 5 years, though I have come across examples of some plans that do permit a longer pay back period of 10, 15, even 30 years if the loan is used for a home purchase.  But consider this article: The 403(b) Loan: The New Debtors Prison? Finally, to your last point:  Yes, if you have an IRA, there are rules permitting withdrawal of up to $10,000 penalty-free for use towards the purchase of a first home.  See page 53 in IRS Publication 590.  There's also a good article at Fool.com: All About IRAs - For First Time Home Buyers. Such a withdrawal from a traditional IRA remains subject to ordinary income tax.  If have a Roth IRA, you can withdraw free of income tax but you need to pay attention to the Roth IRA 5 Year Rule. Additional Resources:" Students at college employed by the college are exempt from the FICA taxes (Social Security and Medicare).  You are not exempt from federal and state income taxes, but if you are a part time employee making a small amount of money, you probably aren't projected to be paid enough between now and the end of the year to trigger the withholding.  If you are concerned that your tax burden for the year will require you to send in money at tax time next year, you can estimate what your taxes will be, and if you determine that you will owe too much, you can fill out a new W-4 form with your HR department and request that additional tax be withheld. I checked this myself and there is no monetary penalty for late filing. However, since I am late I have to do all publication over again which costs me extra $50. "Not sure I understood, so I'll summarize what I think I read: You got scholarship X, paid tuition Y < X, and you got 1098T to report these numbers. You're asking whether you need to pay taxes on (X-Y) that you end up with as income. The answer is: of course. You can have even lower tax liability if you don't include the numbers on W2, right? So why doesn't it occur to you to ask ""if I don't include W2 in the software, it comes up with a smaller tax - do I need to include it?""?" The very link the OP provided focuses on a group of people who lost their jobs to H1B imports.  The people coming in had no special skillset and the people who lost their jobs were required to spend months training their replacements or forfeit their severance pay. I think he is saying that the vote was not the reform needed. Some of you will be too young to understand but my only class action that I was in was Blockbuster. I ended up with like $1.45. If I had to guess I would spend about 20-50 bucks a month in late fees. Sometimes it was my fault because if I missed the weird time to return them I felt I might as well keep them for the fees and would be late again. I did not agree to sue them. I just did not opt out. Blockbuster made tons off of me and people like me. The lawyers who really just put people together as a class made millions. The customer is a pawn. That is what I think he means. You would need meaningful reform in the class action space for this to really matter. This is one of our boys are going to be sued and we should help them. Congress has basically protected Equifax downside risk. Yetto address the reality of the fact that the hack impacts the people congress supposedly works for and was caused by gross negligence. Maybe they should be building an RFP to replace them, not protect them. "What is a 403b? A 403(b) plan is a tax-advantaged retirement savings plan available for public education organizations, some non-profit employers (only US Tax Code 501(c)(3) organizations), cooperative hospital service organizations and self-employed ministers in the United States. Kind of a rare thing. A bit more here: http://www.sec.gov/investor/pubs/teacheroptions.htm under investment options Equity Indexed Annuities are a special type of contract between you and an insurance company. During the accumulation period — when you make either a lump sum payment or a series of payments — the insurance company credits you with a return that is based on changes in an equity index, such as the S&P 500 Composite Stock Price Index. The insurance company typically guarantees a minimum return. Guaranteed minimum return rates vary. After the accumulation period, the insurance company will make periodic payments to you under the terms of your contract, unless you choose to receive your contract value in a lump sum. For more information, please see our ""Fast Answer"" on Equity Indexed Annuities, and read FINRA's investor alert entitled Equity-Indexed Annuitiies — A Complex Choice. So perhaps ""equity indexed annuities"" is the more correct thing to search for and not ""insurance funds""?"