Article Highlights:
• Flat dollar amount penalty
• Percentage of income penalty
• Household income
• Modified adjusted gross income
• Tax filing threshold
The penalty for not having minimum essential health insurance for yourself and other members of your tax family takes a substantial jump in 2015. For 2014, the penalty was the greater of the flat dollar amount ($95 for each adult plus $47.50 for each child under Read More
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.
In 2014, this will be $95 per adult and $48 for each child under age 18. The maximum Read More
This article will discuss the tax provisions enacted as part of the Act and its implications and hardships that will be created for businesses and individuals.
Under the ACT, starting January 1, 2015 (this provision was to start January 1, 2014 but was postponed by President Obama), large businesses (employing 50 or more) are required to purchase health coverage for all full-time employees (more than 30 hours per week or, if the employer elects, at least 130 hours of service per month) [Prop. Regs. Sec 54.4980H-(a)(18)]. The 50 employee requirement is determined by the sum of all full-time employees and full-time equivalents for each calendar month in the preceding year, divided by 12. If the result is 50 or more, the employer is a large employer for the calendar year unless a seasonal worker exception applies. [Sec. 498H(c)(2)]. If employees are paid by the hour, actual hours of service are used. For non-hourly employees, the employer must count actual hours or apply an equivalent of eight hours daily or 40 hours per week, provided the method used does not substantially understate the employees hours of service that would cause the employees not to be treated as full time [Prop. Regs. Sec 54.4980H-(3)(b)]. To determine the 30 hours per week requirement, individually, but, in combination, are counted as full-time solely to determine if an employer is a large employer. The number of full-time employees is determined by calculating the average number of monthly hours of service by all employees who worked less than full-time (capped at 130 hours for any single employee) divided by 12 [Prop. Regs. Sec 54.4980H-(2)(c)] . The employer is considered to offer health care coverage to full-time employees and their dependents for a calendar month if, for that month, it offers such coverage to at least 95% of its full-time employees and their dependents [Prop. Regs. Sec 54.4980H-(4)(a)]. The previous information was taken from “Prop. Regs. Clarify ‘Play or Pay’ Rules of the Affordable Care Act”, The Tax Adviser, May 2013. Read More
This article will discuss the tax provisions enacted as part of the Act and its implications and hardships that will be created for businesses and individuals.
[Blake E. Christian, “Planning for the Medicare Tax on NII”, The Tax Adviser, on line, December 13, 2012]
(1) any interest income from shareholder loans (imputed or otherwise) will be subject to the new surtax. This is the case whether or not the taxpayer’s underlying trade or business is passive or non passive. In the current low-interest-rate environment, taxpayers may be in a position to reduce the interest rate on their related-party loans, potentially reducing the tax liability resulting from the surtax. Another strategy to avoid future interest income is to convert the loan to a contribution to capital.
(2) paying dividends from closely-held corporations. To the extent shareholders and respective businesses have the means to pay a dividend, it may make sense to accelerate payments into 2013. This is especially true if the company feels it has retained cash that the IRS may view as being subject to the accumulated earnings tax under Sec. 531.
(3) S corporations may have accumulated earnings and profits (E&P) from a prior C corporation tax year, which may be distributed before amounts from the accumulated adjustments account (AAA), provided certain elections are made. Additionally, tax-deferred income of domestic international sales corporation (IC-DISC) may be available for Read More
The 2012 “American Health Care Act – the Affordable Health Care Act” (Obama Care) [The Act] contains many provisions that affect both large and small businesses. The Act will have many ramifications, particularly for small businesses in determining if they are required to cover employees with health insurance and penalties for failure to do so. Even businesses that provide insurance today may get caught up under the mandate because they must offer coverage that meets the minimum requirements {Michael D. Tanner, “No [Obama Care]: It will Make It Harder For Small Firms to Grow”, The Wall Street Journal, August 19, 2013}. The Act affects individuals starting in 2014 and businesses starting in 2015, but there are still uncertainties regarding implementation of the Act because the IRS has not released final regulations.
This article will discuss the tax provisions enacted as part of the Act and its implications and hardships that will be created for businesses and individuals.
The IRS regulations list information that may be disclosed to the U.S. Department of Health and Human Resources (HHS) to determine if a taxpayer is eligible to enroll in an exchange and is eligible for government assistance to pay for health care. The IRS can provide HHS with the following taxpayer information: Read More
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