Tax Relief for Local Flood Victims

Individuals and businesses located in the counties of Bay, Gladwin, Isabella and Midland Counties and the Saginaw Chippewa Indian Tribe within Isabella County may qualify for tax relief due to the severe flooding which occurred June, 2017.  Those areas have been given Federal disaster status, which allows certain benefits to those affected.

The IRS has authority to postpone certain deadlines falling on or after June 22, 2017 up until October 31, 2017.  This includes income tax returns with an original or extended due date between June 22, 2017 and October 31, 2017, estimated tax payment due September 15, 2017 and quarterly payroll tax returns which were due July 31, 2017.

For those who experienced significant damage due to the flood, casualty losses may be claimed on their tax returns to offset taxable income.  Because our area received the Federal disaster declaration, taxpayers may choose whether to claim the loss on an amended 2016 return to obtain a speedier refund, or on their 2017 return.  Measurement of the loss is very specific, and any reimbursements, such as insurance and FEMA payments, reduce the deductible loss.  Also, you must be able to itemize deductions on your Federal income tax return to receive a tax reduction benefit from the loss.

Below is a link to the IRS notice dated August 3, 2017 providing more detailed information.  If you feel  any of the tax relief provisions can apply to your situation, please contact our office for assistance.

https://www.irs.gov/uac/newsroom/tax-relief-for-victims-of-severe-storms-and-flooding-in-michigan-1

IRS Phone Scam – IRS Unveils New Video to Warn Taxpayers

WASHINGTON — As incidents of an aggressive telephone scam continue across the country, the Internal Revenue Service unveiled a new YouTube video with a renewed warning to taxpayers not to be fooled by imposters posing as tax agency representatives.

The new Tax Scams video describes some basic tips to help protect taxpayers from tax scams.

These callers may demand money or may say you have a refund due and try to trick you into sharing private information. These con artists can sound convincing when they call. They may know a lot about you, and they usually alter the caller ID to make it look like the IRS is calling. They use fake names and bogus IRS identification badge numbers. If you don’t answer, they often leave an “urgent” callback request.

http://www.irs.gov/uac/Newsroom/Scam-Phone-Calls-Continue-IRS-Unveils-New-Video-to-Warn-Taxpayers

IRS Scam

Scam Phone Calls Continue; IRS Identifies Five Easy Ways to Spot Suspicious Calls

WASHINGTON — The Internal Revenue Service issued a consumer alert today providing taxpayers with additional tips to protect themselves from telephone scam artists calling and pretending to be with the IRS.

These callers may demand money or may say you have a refund due and try to trick you into sharing private information. These con artists can sound convincing when they call. They may know a lot about you, and they usually alter the caller ID to make it look like the IRS is calling. They use fake names and bogus IRS identification badge numbers. If you don’t answer, they often leave an “urgent” callback request.

Click here to view the IRS website for the rest of this article.

Affordable Care Act Notification

All employers covered by the Fair Labor Standards Act (has at least one employee and $500,000 in annual revenue) are encouraged to notify all employees about the Affordable Care Act’s health-care exchanges.  Details about the notification are as follows:

  • Notice should be given to employees by October 1, 2013 (date the health-care exchanges are set to open)
  • Notice should be either hand-delivered, mailed, or emailed to employees
  • Notice should be given to all employees regardless of whether the employee is covered in the employer’s health plan
  • Notice should be given to all full-time and part-time employees
  • Employees hired after October 1, 2013 should be given the notice within 14 days of the employee’s start date
  • Two types of notices – one for employers who offer health insurance and one for employers who do not
  • Templates of the notices are available through the Department of Labor and can be found at the following links:
  • No penalties will be imposed on employers for not providing the notice, however, providing the notice to employees could be beneficial to them

 

Legal Same-Sex Marriages Now Recognized For Federal Tax Purposes

The US Department of Treasury and the IRS recently announced that all same-sex couples legally married in jurisdictions that recognize their marriages will be treated as married for federal tax purposes.  This applies to all same-sex couples regardless of whether or not the jurisdiction where the couple lives recognizes same-sex marriages.

Same-sex couples will be treated as married for all federal tax purposes, including income and gift and estate taxes.  In addition, the ruling applies to all federal tax provisions where marriage is a factor (i.e. filing status, personal/dependency exemptions, employee benefits, etc.)

Individuals who were in same-sex marriages prior to 2013 may go back and file amended returns in order to choose to be treated as married for federal tax purposes for one or more prior tax years still open under the statute of limitations.  The statute of limitations for filing a refund claim is generally three years from the date the return was filed or two years from the date the tax was paid, whichever is later.  As a result, taxpayers can still file a refund claim for tax years 2010, 2011, and 2012.

In addition, same-sex spouse health insurance coverage purchased from employers on an after-tax basis may now be treated as pre-tax and thereby excluded from income.

Patient-Centered Outcomes Research Fee Facts

Patient-Centered Outcomes Research Fee Facts

1. WHAT is this fee?

  • The Patient Protection and Affordable Care Act (aka Obamacare) established the Patient-Centered Outcomes Research Institute (PCORI) to promote the use of evidence-based medicine
  • To fund the PCORI, a fee is being imposed on health insurers and employers who sponsor self-insured health plans

2. WHO does this fee apply to?

  • Issuers of specified health insurance policies (i.e. health insurance companies)
  • Plan sponsors of applicable self-insured health plans (i.e. employers)
  • The fee can apply to both a health insurance company and the employer if the employer has a fully-insured plan but still offers health insurance benefits that are self-funded (i.e. a health reimbursement arrangement)

3. WHEN does this fee begin?

  • The fee begins with plan years that end on or after October 1, 2012
  • The fee will be collected for seven years

4. WHEN is this fee due?

  • The fee is due no later than July 31 of the calendar year immediately following the last day of the plan year
  • First fee payment is due July 31, 2013 if the plan year ended anytime between October 1, 2012 and December 31, 2012

5. HOW is this fee calculated?

  • For plan years ending before October 1, 2013, the fee is $1 times the average number of lives covered under the policy for that plan year
  • For plan years ending after September 30, 2013 and before October 1, 2014, the fee will increase to $2 times the average number of lives covered
  • For subsequent years, the applicable dollar amount will be adjusted to reflect inflation
  • All individuals who are covered during the plan year must be counted (i.e. an employee and his dependent child would be counted as two separate covered lives unless the plan is a health reimbursement arrangement or flexible spending arrangement)

6. WHERE is this fee reported?

  • The fee will be reported on Form 720 (Quarterly Federal Excise Tax Return) and can be found in Part II IRS No. 133
  • The fee is required to be reported annually on the second quarter Form 720 and paid by its due date, July 31
  • If the employer only files Form 720 to report the fee, they are not required to file Form 720 for the 1st, 3rd, and 4th quarters of the year

7. Exceptions

  • The fee does not apply to exempt governmental programs such as Medicare, Medicaid, etc.
  • The fee does not apply to health insurance policies and self-insured plans that provide only excepted benefits, such as plans that offer benefits limited to vision or dental benefits and most flexible spending arrangements

8. Miscellaneous Info

  • The PCORI fee is tax-deductible

 

 

Patient-Centered Outcomes Research Fee

Patient-Centered Outcomes Research Fee

Among the many provisions of the Affordable Care Act, is the Patient-Centered Outcomes Research Trust Fund fee (PCORI fee) that is imposed on issuers of specified health insurance policies and plan sponsors of applicable self-insured health plan.  As an employer, you may be subject to this fee if you have a self-insured health plan as you would be considered the plan sponsor. If you have a fully-insured health plan, the health insurance company will be subject to the fee.  It is important to note that even though you many have a fully-insured health plan, you may still be subject to the PCORI fee if you offer other health insurance benefits that are self-funded (i.e. a health reimbursement arrangement).  Please go to the following link to see an IRS table that outlines what types of insurance policies are subject to the fee and who is responsible for paying the fee:

http://www.irs.gov/uac/Application-of-the-Patient-Centered-Outcomes-Research-Trust-Fund-Fee-to-Common-Types-of-Health-Coverage-or-Arrangements

The fee begins with plan years ending before October 1, 2013 and will continue for seven years thereafter.

The fee amount is $1 times the average number of covered lives under the plan for policy years ending before October 1, 2013 and will increase to $2 for plan years ending before October 1, 2014.  For plan years ending after October 1, 2014, the dollar amount will be adjusted to reflect inflation.  The fee is reported on Form 720, Quarterly Federal Excise Tax Return and is required to be reported annually on the second quarter Form 720 which has a due date of July 31.  The first fee payment is due July 31, 2013.  Please go to the following link to find a copy of Form 720:

http://www.irs.gov/pub/irs-pdf/f720.pdf

If you have any questions or need further assistance, please do not hesitate to contact our office.

Obamacare For Individuals

The following is a brief overview of the key tax changes affecting individuals in the Patient Protection and Affordable Care Act (also known as Obamacare).

Individual mandate. The new law contains an “individual mandate”—a requirement that U.S. citizens and legal residents have qualifying health coverage or be subject to a tax penalty. Under the new law, those without qualifying health coverage will pay a tax penalty of the greater of: (a) $695 per year, up to a maximum of three times that amount ($2,085) per family, or (b) 2.5% of household income over the threshold amount of income required for income tax return filing. The penalty will be phased in according to the following schedule: $95 in 2014, $325 in 2015, and $695 in 2016 for the flat fee or 1.0% of taxable income in 2014, 2.0% of taxable income in 2015, and 2.5% of taxable income in 2016. Beginning after 2016, the penalty will be increased annually by a cost-of-living adjustment. Exemptions will be granted for financial hardship, religious objections, American Indians, those without coverage for less than three months, aliens not lawfully present in the U.S., incarcerated individuals, those for whom the lowest cost plan option exceeds 8% of household income, those with incomes below the tax filing thresholds, and those residing outside of the U.S.

Premium assistance tax credits for purchasing health insurance. The centerpiece of the health care legislation is its provision of tax credits to low and middle income individuals and families for the purchase of health insurance. For tax years ending after 2013, the new law creates a refundable tax credit (the “premium assistance credit”) for eligible individuals and families who purchase health insurance through an Exchange. The premium assistance credit, which is refundable and payable in advance directly to the insurer, subsidizes the purchase of certain health insurance plans through an Exchange. Under the provision, an eligible individual enrolls in a plan offered through an Exchange and reports his or her income to the Exchange. Based on the information provided to the Exchange, the individual receives a premium assistance credit based on income and IRS pays the premium assistance credit amount directly to the insurance plan in which the individual is enrolled. The individual then pays to the plan in which he or she is enrolled the dollar difference between the premium assistance credit amount and the total premium charged for the plan. For employed individuals who purchase health insurance through an Exchange, the premium payments are made through payroll deductions.

The premium assistance credit will be available for individuals and families with incomes up to 400% of the federal poverty level (currently $44,680 for singles and $92,200 for a family of four) that are not eligible for Medicaid, employer sponsored insurance, or other acceptable coverage. The credits will be available on a sliding scale basis. The amount of the credit will be based on the percentage of income the cost of premiums represents, rising from 2% of income for those at 100% of the federal poverty level for the family size involved to 9.5% of income for those at 400% of the federal poverty level for the family size involved.