Category Archives: 2013 Tax Changes

Affordable Care Act Tax Provision for Large Employers – Beginning October 1, 2013

In 2015 large employers will have annual reporting responsibilities concerning whether and what health insurance they offered to their full-time employees.

Some of the provisions of the Affordable Care Act, or health care law, apply only to large employers, generally those with 50 or more full-time equivalent employees.

Coverage

  • Beginning Oct. 1, 2013, if you have 50 or fewer employees, you can purchase affordable insurance through the Small Business Health Options Program (SHOP).
  • To learn more about market reforms and various plan requirements, visit HealthCare.gov Reporting

Reporting

  • Effective for calendar year 2015, you must file an annual return reporting whether and what health insurance you offered your employees. This rule is optional for 2014. Learn more.
  • Effective for calendar year 2015, if you provide self-insured health coverage to your employees, you must file an annual return reporting certain information for each employee you cover.This rule is optional for 2014. Learn more.
  • Beginning Jan. 1, 2013, you must withhold and report an additional 0.9 percent on employee wages or compensation that exceed $200,000. Learn more.
  • You may be required to report the value of the health insurance coverage you provided to each employee on his or her Form W-2.

Payment & Provisions

  • Effective for calendar year 2015, you may have to make a payment if you do not offer adequate, affordable coverage to your full-time employees, and one or more of those employees get a Premium Tax Credit. Learn more.
  • If you self-insure, you may be required to pay a fee to help fund the Patient- Centered Outcomes Research Trust Fund

Affordable Care Act Provisions for Small Employers, Beginning October 1, 2013

Some of the provisions of the Affordable Care Act, or health care law, apply only to small employers, generally those with fewer than 50 full-time employees or equivalents.

If you have fewer than 50 employees, but are a member of an ownership group with 50 or more full-time equivalent employees, you are subject to the rules for large employers.

Coverage

  • Beginning Oct. 1, 2013, if you have 50 or fewer employees, you can purchase affordable insurance through the Small Business Health Options Program (SHOP).
  • To learn more about how the Affordable Care Act may affect your business, visit HealthCare.gov.

Reporting

  • Effective for calendar year 2015, if you provide self-insured health coverage to your employees, you must file an annual return reporting certain information for each employee you cover. This rule is optional for 2014. Learn more.
  • Beginning Jan. 1, 2013, you must withhold and report an additional 0.9 percent on employee wages or compensation that exceed $200,000. Learn more.
  • You may be required to report the value of the health insurance coverage you provided to each employee on his or her Form W-2.

Payments & Credits

 

IT IS IMPORTANT TO CHOOSE A TAX PROFESSIONAL, SUCH AS AN ENROLLED AGENT, WHO KEEPS UP WITH THE RULES AND REGULATIONS AND USES THIS EXPERTISE TO DO THE BEST JOB POSSIBLE FOR EVERY TAXPAYER. 

R. Patrick Michael, EA, continues to provide tax preparation and financial consultation services since 1978.  Pat can be reached at  619-589-8680

 

Questions and Answers on Employer-Shared Responsibility Provisions Under the Affordable Care Act

Transition Relief for 2014 Under §§ 6055 (§ 6055 Information Reporting), 6056 (§ 6056 Information Reporting) and 4980H (Employer Shared Responsibility Provisions)

small IRS logo for bloggingNOT-129718-13
Notice 2013-45

 

I. PURPOSE AND OVERVIEW

This notice provides transition relief for 2014 from (1) the information reporting requirements applicable to insurers, self-insuring employers, and certain other providers of minimum essential coverage under § 6055 of the Internal Revenue Code (Code) (§ 6055 Information Reporting), (2) the information reporting requirements applicable to applicable large employers under § 6056 (§ 6056 Information Reporting), and (3) the employer shared responsibility provisions under § 4980H (Employer Shared Responsibility Provisions). Continue reading →

IRS Invites Public Comment on Recommendations for 2013-2014 Guidance Priority List

The Dept. of Treasury and IRS invite public comment on recommendations for items that should be included on the 2013-2014 Guidance Priority List.

The Treasury Department’s Office of Tax Policy and the Service use the Guidance Priority List each year to identify and prioritize the tax issues that should be addressed through regulations, revenue rulings, revenue procedures, notices, and other published administrative guidance. Continue reading →

IRS revises Guidance on W-2 reporting of Group Health Insurance Costs

Employers need to understand the latest IRS pertaining to the ACA, what their obligations are and have systems in place for tracking and calculating reportable costs. For many, the reporting requirement became effective for the 2012 tax year— but for qualifying small employers (filing less than 250 W-2’s) many of these obligations will take effect for the 2013 tax year.   Continue reading →

IRS Offers Businesses Voluntary Classification Settlement Program

Back in July we wrote about businesses that have treated workers as 1099 contractors (“Are you making a mistake with your 1099 Contractors?”), and pointed out that if the IRS determines that your workers are not 1099 contractors, but actually “employees”, you may be faced with unexpected payroll taxes and penalties. The IRS has created the VCSP program for businesses that want to voluntarily reclassify their workers as employees. Continue reading →

More Information on W-2 Reporting Requirements for Employers

Not sure what to report on W-2, optional or mandatory?

Our table is based on IRS Notice 2012-9, which, until further guidance, contains the requirements for tax-year 2012 and beyond. Items listed as “optional” are designated as such based on transition relief provided by Notice 2012-9, and their “optional” status may be changed by future guidance. However, any such change will not be applicable until the tax year beginning at least six months after the date of issuance of such guidance. Continue reading →

Informational Reporting of the Cost of Employer-Sponsored Group Health Care Plan Coverage

Not sure what to report on W-2, optional or mandatory?

This table is based on IRS Notice 2012-9, which, until further guidance, contains the requirements for tax-year 2012 and beyond. Items listed as “optional” are designated as such based on transition relief provided by Notice 2012-9, and their “optional” status may be changed by future guidance. However, any such change will not be applicable until the tax year beginning at least six months after the date of issuance of such guidance.

This table was created at the suggestion of and in collaboration with the IRS’ Information Reporting Program Advisory Committee (IRPAC). IRPAC’s members are representatives of industries responsible for providing information returns, such as Form W-2, to the IRS. IRPAC works with IRS to improve the information reporting process.

Form W-2 Changes

8 Facts to Know if You Receive an IRS Letter or Notice

What to do if you receive an IRS Notice or Letter

While it may be tempting to navigate the new tax laws and changes on your own, it is always better to consult a tax professional – specifically – Enrolled Agents (EA) who are recognized as the tax experts.  Your EA will know what to do, why you received the notice or letter, and the immediate steps to take.  However, if you want to do this on your own – here are some facts you need to know.     Continue reading →

Taxes, Death… and Marriage?

Marriage – tax advantage?  Maybe yes, maybe no.

Marriage can have a tax-rate advantage, but it depends on the incomes.  Did you know you can actually save tax money if one spouse is making a lot less than the other?  It’s true.  The tax bill of the high-income earner can almost (if not totally) be cancelled out.  Continue reading →

ATTN: California Taxpayers – Head of Household

Newest update on the ‘Head of Household’ Audit Letters

Sacramento – The Franchise Tax Board (FTB) announced mailing more than 100,000 audit letters to taxpayers to verify their “Head of Household”(HOH) filing status on their 2012 state tax return. We are encouraging all of our clients – once the questionnaire is received – to call for an appointment to come in at (619) 589-8680.

Taxpayers who do not qualify will have their tax reassessed at either the single or married-filing-separate filing status. FTB assessed $26 million in additional tax to the nearly 38,000 taxpayers who used this status last year and did not meet its requirements.  Continue reading →

Want to cut your spouse’s tax cost of inherited IRA’s?

Use Estate Planning to protect your IRAs!

This post speaks to the IRA owner in planning the future, and how essential it is to plan your estate today.  Put bluntly, “To get your estate situation the way you want it at death, you need to do your estate planning at the same time you build your asset portfolio.  If you wait until you have built them, estate planning is much more difficult¹.”    Continue reading →

Attention California Business and Schedule C Taxpayers

Do you know about California’s City Business Tax Program?You may be getting a notice from your city.  The FTB and cities are looking for revenue and the newest participants are Downey, Escondido, Fresno, Salinas, Santa Maria, and Tustin.

According to Spidell’s “…in June, cities were reminded to transmit 2012 business license information to the FTB on or before June 30.”  For more information on the City Business Tax Program, click here.

“From this information, the FTB will send filing enforcement notices to self-employed individuals and other businesses that have failed to file a return.

Cities happily send this information in exchange for a list of businesses that have filed tax returns. The cities use this information to contact the business and assess fees, penalties, and interest for failing to file and pay for a city business license. The FTB sends the data to the cities in December of each year.”

Each city has different requirements as to who must have a license.

For a pdf of participating cities, click here

 

Source:  Spidell’s July 2013 California Taxletter

 

UPDATE : California Offset Program Expands

California To Collect Debts From Out-Of-State Residents

The California offset program has been expanded to allow reciprocal agreements for California to collect debts from out-of-state residents. The Delinquent Taxpayer Accountability Act added Revenue and Taxation Code Section 19377.5, granting the Franchise Tax Board (FTB) the authority to enter into reciprocal agreements with other states to offset refunds to pay personal income tax (PIT) debts owed to the partner state. Continue reading →

Are you making a mistake with your 1099 Contractors?

Do you know what factors the IRS looks at in determining Independent Contractor Status?

Actually, the IRS does not look specifically at any one factor, but one factor can be enough to cause the IRS to take a closer look.  They may determine that a worker is an employee and not a contractor.  What does that mean for you?  That means if they determine that your contractor was an employee – you could face unexpected payroll taxes and penalties.  That’s why we’re giving you tools to make sure you know the difference, and that you are taking care of business. Continue reading →

Federal Income Tax Changes Summary for 2012

The Franchise Tax Board of California has provided their report of the Federal Income Tax Changes Summary for 2012.  60 pages of changes.  The FTB 2012 summary explains new federal laws, along with the effective dates, and the corresponding California law, if any. It includes an explanation of any changes made in response to the new federal law, and the impact on California revenue if California conforms to the federal changes.

Bigger Income This Year? Call Me!

If you expect a jump in your income, we need to talk.  Have you sold stock or property?  Getting a big bonus (larger than in the past)? Had an unexpected windfall?  I’ve used the word “jump” because if your income is usually high, we both know the numbers, and I make a point of keeping you up on the numbers.  If, on the other hand, your numbers suddenly increase (larger than I normally see) then please let me know.  Continue reading →