Authortaxingtimes

Affordable Care Act: Premium Tax Credit and Individual Shared Payment Reporting – Are you ready?

Glass globe By:  Joe Zitzka

As we roll into tax filing season, have you considered how to handle the new Affordable Care Act reporting requirements?

For the 2014 tax year, taxpayers will now be required to report health care coverage on their tax returns.

There are two new reporting requirements that will impact many U.S. Individual Income Tax Returns for the 2014 tax year.  The individual shared responsibility payment and the premium tax credit will present new challenges for taxpayers.  Taxpayers will now be required to determine if they have qualifying health insurance or qualify for an exemption.  Taxpayers will also have to determine whether they qualify for the premium tax credit.

When preparing your Form 1040 for the 2014 tax year, taxpayers (unless an exemption applies) must confirm that they either have health insurance coverage throughout the year or make a payment with they file their federal income tax return.

In general, you may qualify for the premium tax credit if:

  1. You buy your health insurance through the Health Insurance Maketplace;
  2. Are not eligible for coverage through an employer or government plan;
  3. Are within certain income limits;
  4. Do not file a married filing separate return (unless you meet certain limited requirements); and
  5. Cannot be claimed as a dependent by another person.

Tax Identity Theft

MazeBy:  Amanda Wilson

There are many news stories right now about people going to file their tax returns only to discover that someone has already done so.  This is such a big problem right now that some states have temporarily halted the acceptance of state tax returns.

This is also a big problem in the federal area.  To help combat fraud and identity theft, the IRS has announced that as of January 1, 2015,  it will limit to three the number of refunds that it will electronically deposit into a single financial account.  After that, any subsequent refunds will be issued by paper check and mailed to the taxpayer (this is thought to be a preventative measure since the majority of the identity thieves are outside of the U.S.).

It is not clear,  yet, whether this new IRS policy will help combat fraud.  What is clear is that this continues to be a big issue for taxpayers, and something you should watch out for.  If you find that you are the victim of tax-related identity theft, file a Form 14039 with the IRS.

Don’t Miss the Boat!

Magnifying Glass and Tax

By:  Amanda Wilson

Undoubtedly, right before the end of the year, you were inundated with information about steps you could take as part of the year-end tax planning for your business. While the end of the year does offer great tax planning opportunities, there is another important time that often goes unnoticed – April 15th.  If your business uses a tax partnership (which can be in the form of a general partnership, limited partnership, or limited liability company), take action now.  You do not want to miss the boat on this significant tax planning opportunity.

The partnership tax rules allow partners to amend their partnership agreement retroactively to January 1 of the prior year if the amendment is in place before the tax return (without extensions) for that year is due. More simply, an amendment made before April 15, 2015 can be made effective for the 2014 tax year. For this reason, now is the time to review how your partnership will be allocating taxable income and losses to its partners for the 2014 tax year.  Often times, the allocations may give you unexpected or unfavorable results.  Is one partner allocated losses that he cannot use?  Is another partner getting a huge allocation of taxable income unexpectedly?

If the answer is yes, consider making changes.   Some simple tax planning could minimize or avoid these tax results.  But you have to act now.  Unfortunately, once the original due date for filing the partnership return has passed, this planning opportunity is lost, even if your partnership received an extension for filing its return.

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