Archive for Harold Goedde

2015 New Developments Part 2

STANDARD DEDUCTION

The basic amount for single taxpayers is $6,300, married filing joint and surviving spouse $12,600, married filing separate $6,300 (zero if one spouse itemizes because on separate returns both spouses must either itemize or use the standard deduction), and head of household $9,250. The additional standard deduction is $1,550 for singles and head of household, $1,250 for married filing joint and surviving spouse. The standard deduction for those claimed as a dependent on another return can’t exceed the lesser of (1) $6,300 or (2) the greater of $1,050 plus earned income. Read More

Written by | Posted in 2016 Tax Changes • 2016 Tax update • Tax Deductions • Tax Education

Other New Developments For 2015 Part 1

DEFERRED RETIREMENT PLANS LIMITATION

1. 401(K). The maximum contribution is $18,000 but increases to $24,000 if age 50 and older (up to $6,000 in catch­-up contributions).

2. Defined Benefit Plans. The maximum benefit amount is $210,000.

3. Defined contribution plan [e.g 401(k), 403(b)) and 457]. The maximum contribution is the lesser of $53,000 or 100% of compensation.

4. Regular and Roth IRA. The maximum contribution is $5,500 plus a $1,000 catch ­up contribution if age 50 and older. Taxpayer must have earned income. Read More

Written by | Posted in Retirement • Tax Management

Obama Care – New Developments For 2015

1. Employers subject to the heath care mandate.

 

All companies with 50 or more full­time equivalent employees are required to offer health care benefits to full­time employees and their dependents. If not provided, they are subject to a fine (see below). The insurance plan must provide “minimum value” (plan pays at least 60% of the cost of covered health benefits and provide substantial coverage of inpatient hospital and doctors services).

2. Fines for non compliance: The amount is the lesser of:

 

(a) $3,000 times the number of full­time employees, in excess of 30, who buy a federally subsidized policy through a state exchange and receive a premium assistance tax credit. To avoid this tax, the employer must pay at least 60% of benefit costs. The share of the premium paid by a worker can’t be more than 9.5% of earned income, based on the prior year=s W­2. Since large employers are ineligible to buy group coverage on an exchange for two or three years, they should buy coverage through their present insurance brokers. Read More

Written by | Posted in Affordable Healthcare Act • ObamaCare

Year End Tax Points And Recent Developments

TaxConnections Member Harold Goedde
Timing of year-end contributions:

Contributions made by check are deductible in 2015 if the check is mailed by year-end. If payment is made by bank credit card, it is deductible in 2015 if the charge is made by year-end.  It doesn’t matter when the credit card payment is made. If the donation is made with a retail store credit card, the deduction cannot be taken until the card is paid, even though it was charged in 2015.

Donations of securities and other property:

This is an excellent way to make a contribution without paying cash. Taxpayers can deduct the fair value of the securities on the date of the gift.  Donating appreciated securities is a good move because if you sold the securities Read More

Written by | Posted in Tax Planning

Recent Important Tax Changes

Introduction

The three month highway funding extension was passed by the House July 29 and by the Senate July 30. The president signed the bill into law on July 31. The law contains several important tax provisions changing the due dates for partnership and C corporation returns, FinCEN Form 114-Report of Foreign Bank and Financial Accounts (FBAR), several common tax returns and several other IRS information returns It also overrules the Supreme Court’s Home Concrete decision, requires that additional information be reported on mortgage information statements, and requires consistent basis reporting between estates and beneficiaries. Read More

Written by | Posted in Corporate • Estate Planning Tax • FBAR • Federal • IRS • Partnership

High Deductible Health Plans

Features

An high deductible health plan (HDHP)  has a higher annual deductible than typical health plans and a maximum limit on the sum of the annual deductible and out-of-pocket medical expenses that you must pay for covered expenses. Out-of-pocket expenses include copayments and other amounts, but do not includes insurance  premiums (see exception below). It may provide preventive medical care benefits without a deductible or with a deductible less than the minimum annual deductible.

The plan must have a annual deduction and a annual out-of pocket maximum. For family coverage, the terms of the HDHP must deny payments to all family members until the Read More

Written by | Posted in Individual • Tax Deductions

Recent Court Decisions And IRS Rulings

1. Alimony.

(A) Alimony paid subject to a contingency is not deductible (taxable). A divorced couple’s agreement provided that spousal maintenance would end when their child, who had a learning disability, moved out of the mother’s home The IRS denied the alimony deduction due to the contingency clause and held the payments to be non-deductible child support. The law states support payments are considered alimony only if the payments are for spousal support ordered by a court and cease upon the death of the spouse. The IRS decision was upheld by the Tax Court [Resnik, TC Summ. OP. 2015-11].

(B) Paying attorney fees for an ex-spouse is not considered deductible alimony. For Read More

Written by | Posted in IRS • Tax Deductions • Tax Tips

New Developments (As of December 23, 2014)

Recently, there have been several important IRS and court opinions affecting various areas of taxation.

A. Distribution of benefits to estate beneficiaries.

An executor was aware that the estate would owe significant taxes but instead of distributing the assets to the beneficiaries, he had the estate distribute money to himself and other heirs. As a result, the estate did not have enough funds to pay the taxes. The IRS put a lien against other property owned by the executor. The executor appealed the IRS decision to a Pennsylvania District court. The court upheld the IRS decision stating that the executor is personally liable for depleting the assets of the estate [Stiles, D.C., PA]. Read More

Written by | Posted in IRS • Tax Deductions • Tax Policy • Tax Provision/Tax Reporting

Deduction For Home Office Allowed

To claim a home office deduction the IRS requires that the location be used 100% exclusively for business. If any of it is used for personal use, the deduction will be disallowed. This does not mean that part of a home can’t be used for personal use but the part used for business must be exclusively used for that purpose.

Recent Case

In a recent situation, a taxpayer was the account director for a New York public relations firm based in Los Angeles and was the only employee in the New York office. The company did not provide an office and required her to use part of her apartment for an office which included a desk, file cabinets, shelves, a bookcase and a sofa. Her home address, business phone number and business email address were listed in the Read More

Written by | Posted in Individual • Small Business • Tax Deductions

Premium Credits Under The Affordable Health Care Act

Under the Affordable Health Care Act (ACA), individuals who purchase health care coverage through an exchange and whose income is under certain amounts will be eligible for tax credits. Form 8962 will be used to enter any advance credits received and amounts entitled to for the current tax year. The net amount (credit entitled to less the advance credit) is then entered on a separate line on the back of Form 1040 or 1040A. Taxpayers who claim the credit cannot file Form 1040 EZ (for AGI less than $100,000 and do not itemize and don’t have any dependents) but must file Form 1040 or 1040A. If you are eligible for the credit, you can choose to:

• Get it now: have some or all of the estimated credit paid in advance directly to your insurance company to lower what you pay out-of-pocket for your monthly premiums. Read More

Written by | Posted in Affordable Healthcare Act • Small Business

Penalties For Not Having Healthcare Coverage Under The Affordable Health Care Act

The 2010 Affordable Health Care Act (ACA) (“Obama Care”) provided that taxpayers who elect not to be covered by health insurance will be subject to a penalty starting in 2014. The penalty will be paid when their federal tax return is filed. There are some exceptions when the penalty will not apply. Taxpayers who purchase coverage through an exchange will receive Form 1095-A reporting the monthly health care premiums paid and any advance premium credit payments.

This article will discuss the penalties, penalty exceptions and tax forms required to report.

Flat Amount

In 2014, this will be $95 per adult and $48 for each child under age 18. The maximum Read More

Written by | Posted in Affordable Healthcare Act
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