General Information

New IRS Publication helps you understand the Health Care Law

There is a new publication that will help you learn about how the Affordable Care Act affects your taxes.  IRS Publication 5187, Health Care Law: What’s New for Individuals and Families is now available on IRS.gov/aca. While the health care law has several parts, this publication breaks down what’s new for the 2014 federal tax return you will be filing in 2015.

This new publication provides important information for taxpayers who:health-care-law

  • Had health insurance coverage for the entire year
  • Did not have health coverage for each month of the year
  • Purchased health insurance from the Marketplace
  • Might be eligible for an exemption from  the coverage requirement
  • Had advance payments of the premium tax credit sent to their insurance provider
  • Is claiming the premium tax credit on their tax return

The publication includes a glossary that will help you understand new terms related to ACA. It also addresses the new lines for reporting ACA information on Forms 1040, 1040-A and 1040-EZ.

Most people have qualifying health coverage, and all they will need to do is simply check a box on their tax return.

You can access Publication 5187 at IRS.gov/aca, along with other important information related to the health care law. You can also find it by typing “p5187” into the search window at the top of any IRS.gov page or “5187” in the Forms and Pubs search window on IRS.gov.

Information from IRS Tax Tips Issue Number HCTT-2014-23 was used in this post.

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The Health Insurance Marketplace

The open enrollment period to purchase health insurance coverage for 2015 through the Health Insurance Marketplace runs from Nov.15, 2014, through Feb. 15, 2015.

The Marketplace is where you can find health insurance coverage options and enroll in the coverage that fits your budget and meets your needs. Visit your Marketplace thealth insuranceo find information about:

  • health insurance options,
  • how to purchase coverage, and
  • how to get financial assistance with the cost of insurance.

Visit the Department of Health and Human Services website at HealthCare.gov to learn more about coverage options, financial assistance and to enroll in coverage through the Marketplace.

If you get health insurance coverage through the Marketplace, you may be able to lower your monthly premium through an advance payment of the premium tax credit. This credit is for people who have household income between one and four times the federal poverty level. Find out more about the Premium Tax Credit and other Affordable Care Act tax provisions.

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Tax Refund Statute of Limitations

So you overpaid your federal income taxes, life got busy, and you forgot to file a return to claim your refund. You’ll get around to it — but will you get around to it in time to get your money back?

The time limit for claiming your refund is called the statute of limitations. The general rule for your federal income tax return is that you havEXPIREDe either two or three years to file a refund claim. Specifically, you have to file the claim within three years from the time you filed the tax return or within two years from the time you paid the tax, whichever period expires later.

Worse, there’s a wrinkle you may not expect: When you haven’t filed a return, the two-year period applies.

And more bad news: Even if you file your claim within the proper two-year time period, your refund could be limited further by a “lookback rule.” This rule says you can only get a refund for the tax actually paid during those two years. The outcome? Estimated taxes or withheld federal income taxes may fall outside the time period. That means those amounts might not be recoverable.

Be aware that other time limits apply in certain circumstances, such as when your overpayment is due to a bad debt.

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Employer-provided group-term life insurance

Does your employer provide you with group term life insurance? If so, and if your salary is higher than $50,000, this employee “benefit” may be creating undesirable income tax consequences for you. Here’s why.

The first $50,000 of group term life insurance coverage that your employer provides is excluded from taxable income and doesn’t add anything to your income tax bill. But the employer-paid cost of group term coverage in excess of $50,000 is taxable income to you even though you never actually receive it (i.e., it is “phantom income”). What’s worse, the cost of group term insurance must be determined under a table prepared by IRS even if the employer’s actual cost is less than the cost figured under the table. Under this table, the amount of taxable phantom income attributed to an older employee will often be higher than the premium the employee would pay for comparable coverage under an individual term policy. This tax trap gets worse as the employee gets older and as the amount of his compensation increases.

What should you do if you think you might be one of the people for whom the tax cost of employer-provided group term life insurance is undesirably high? First, you should determine if this is actually the case. If a specific dollar amount appears in Box 12 of your Form W-2 (with code “C“), that dollar amount represents your employer’s cost of providing you with group-term life insurance coverage in excess of $50,000, less any amount you paid for the coverage. You are responsible for any and all Federal, State, and local taxes on the amount in Box 12, and for the FICA tax (Social Security and Medicare) as well. But keep in mind that the amount in Box 12 is already included as part of your total “Wages, tips and other compensation” in Box 1 of the W-2, and it’s the Box 1 amount that’s reported on your tax return.

If you then decide that this cost is too high for the benefit you’re getting in return, you should find out whether your employer has a “carve-out” plan (a plan that carves out selected employees from group term coverage) or, if not, whether it would be willing to create one. There are several different types of carve-out plans that employers can offer to their employees. For example, the employer can continue to provide $50,000 of group term insurance (since there’s no tax cost for the first $50,000 of coverage) and either provide the employee with an individual policy for the balance of the coverage, or give the employee the amount the employer would have spent for the excess coverage as a cash bonus that the employee can use to pay the premiums on an individual policy.

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Affordable Care Act – Action Notice

Beginning October 1st, employers are required to provide written notices to all employees – regardless of benefit enrollment status or full / part-time status – about health coverage options. This includes notifications about federal and state health insurance marketplaces.  These government-run marketplaces will be open this fall.

Employers can send the notices by mail or electronically.  Effective January 1st, 2014, employers will have 14 days from the employees start date to provide a notice. The Department of Labor has provided two sample notices or employers who currently offer coverage and for employers who do not offer health insurance.

Links to model notice from the United States Department of Labor:

http://www.dol.gov/ebsa/pdf/FLSAwithoutplans.pdf

http://www.dol.gov/ebsa/pdf/FLSAwithplans.pdf

Employers can also create their own notices, which must include:

  •  Explanation of the marketplaces
  • Reference to www.healthcare.gov
  • Information about premium subsidies that may be available if employees purchase a qualified health plan through the marketplace
  • Notification that employees may lose their employer contribution to the health plan if it is obtained through the marketplace

To learn more about the Affordable Care Act please visit the US Department of Labor site at http://www.dol.gov/ebsa/healthreform/

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Beginning on Jan. 1, 2013, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be: 56.5 cents per mile for business miles driven. 24 cents per mile driven for medical or moving purposes. 14 cents per mile driven in service of charitable organizations.

The Internal Revenue Service issued the 2013 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

Beginning on Jan. 1, 2013, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

  • 56.5 cents per mile for business miles driven.
  • 24 cents per mile driven for medical or moving purposes.
  • 14 cents per mile driven in service of charitable organizations.

The rate for business miles driven during 2013 increases 1 cent from the 2012 rate. The medical and moving rate is also up 1 cent per mile from the 2012 rate.

The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs.

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for more than four vehicles used simultaneously.

These and other requirements for a taxpayer to use a standard mileage rate to calculate the amount of a deductible business, moving, medical, or charitable expense are in Rev. Proc. 2010-51. Notice 2012-72 contains the standard mileage rates, the amount a taxpayer must use in calculating reductions to basis for depreciation taken under the business standard mileage rate, and the maximum standard automobile cost that a taxpayer may use in computing the allowance under a fixed and variable rate plan.

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Win an Xbox 360 in our Facebook Drawing!

How would you like to win an Xbox 360 Holiday Bundle just in time for Christmas this year?  If you would then you need to enter our Facebook Drawing. Check out our facebook page for the details. 

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Since 1993, Fox Peterson has fostered entrepreneurial spirit by providing a wide range of accounting, consulting and tax services to small businesses throughout Arizona and the United States.

A small group of Accountants in Mesa AZ who specialize developing serious financial strategies for small businesses.

Since 1993, Fox Peterson has fostered entrepreneurial spirit by providing a wide range of accounting, consulting and tax services to small businesses throughout Arizona and the United States. Clients of Fox Peterson experience the professional level and knowledge expected from a large industry stronghold (accounting firm), but with the personal attention and reasonable rates of a small, local agency. We are proud to preserve the old-fashioned benefits of professional and prompt service while ensuring our company is up-to-date with all of the latest tax laws and accounting technology. As a Fox Peterson client, you will benefit from the ease of mind that comes with service you can rely on.

We emphasize long-term relationships and continually advise our clients to ensure their future success. The way we see it, our clients’ success is our success. Our CPAs are proficient in all aspects of taxes and accounting, so no matter what your small business or personal accounting needs are, we can help. We cater mostly to small, closely-held businesses, but also serve a variety of individuals and organizations. We offer all the amenities and services of a large accounting firm, but care enough to establish strong relationships with all of our clients. We firmly believe that by getting to know you, we are better able serve you.

We emphasize long-term relationships and continually advise our clients to ensure their future success. The way we see it, our clients’ success is our success. Our CPAs are proficient in all aspects of taxes and accounting, so no matter what your small business or personal accounting needs are, we can help. We cater mostly to small, closely-held businesses, but also serve a variety of individuals and organizations. We offer all the amenities and services of a large accounting firm, but care enough to establish strong relationships with all of our clients. We firmly believe that by getting to know you, we are better able serve you.

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the theory and system of setting up, maintaining, and auditing the books of a firm; artof analyzing the financial position and operating results of a business house from a study of its sales, purchases, overhead, etc. (distinguished from bookkeeping).

ac·count·ing

[uh-koun-ting] noun

1.

the theory and system of setting up, maintaining, and auditing the books of a firm; art of analyzing the financial position and operating results of a business house from a study of its sales, purchases, overhead, etc. (distinguished from bookkeeping).
2.

a detailed report of the financial state or transactions of a person or entity: an accounting of the estate.
3.

the rendering or submission of such a report.
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