Year: 2015

Pastors look at Social Security

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(Good advise for the rest of us too)……

Things You Must Have If You Opt Out

If you are going to opt out, there are some things you must do for the rest of your life from a common sense perspective to make sure you and your family are taken care of. They are things you should be doing anyway, but you definitely should not opt out without having these things in place. Otherwise, you’re signing up for major risks that are just not worth taking.

  • Term life insurance—You must have a level term policy that covers about 10 times your income. (That’s the average amount, but check with a professional who will take factors like age, income and specific aspects into consideration.) That way, if something happens to you, your family will be taken care of. If you die with children under 18, they would receive a Social Security check, so you’ve got to have a life insurance policy in place if you’re going to opt out, and you must keep it—period—because Social Security is not going to be there for your family to count on.
  • Long-term disability insurance—If you become disabled and have opted out, you will not receive anything from the S.S.I. at all. Do not opt out without having a good long-term disability policy in place. Once you have it, keep it!
  • Retirement savings – a 403(b) and Roth IRA—You will not be receiving a Social Security check at retirement if you opt out. So what?! If you take the thousands and thousands of dollars you’d be paying into Social Security and put that into a Roth IRA in a good growth stock mutual fund, you’ll retire with dignity times 20!
  • Long-Term Care Insurance—Dave recommends long-term care insurance the day you turn 60. So if that’s you, add that to your list of must-have coverages!

ACA: Affordable ? Care ?

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Affordable Care Act changes for individuals

The individual mandate penalty increases to the higher of 2 percent of yearly household income or $325 person per year, with a maximum penalty per family for those using this method of $975.

New forms to contend with

The Form 1095-B and Form 1095-C, which were optional for calendar year 2014, must be filed by any person that provides minimum essential coverage to an individual

Also, taxpayers must receive a payee statement (1098-T) before they can claim an American Opportunity, Hope, or Lifetime Learning Credit or take the deduction for qualified tuition and related expenses

What double taxation ? C Corp can be a useful tax planning tool.

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If you visit dividend.com, you’ll be reminded of some oft overlooked tax planning information.cropped-nwb_top21.jpg

Most contractors / small business owners think of LLC or S-Corp as the only way to go because of ‘double taxation’. But ‘qualified dividends’ – which is most – get a 0% long term capital gains break if you are in the 10% or 15% bracket.

Contact me for more information if you are you’re own boss.

The Importance of Corporate Minutes

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When a business decides to incorporate, benefits and rights accrue to the corporation, its shareholders, conference_tilt_left[1]and officers under state law. These advantages include, for example, limited liability to the shareholders, and tax advantages for operation as a corporation. Without maintaining accurate corporate minutes, these benefits and rights may be lost. Corporate minutes set the policies for the board of directors and officers of the corporation. These directions provide a means for the corporation to maintain its corporate status. Of course, corporate minutes may be a bothersome task, but they may be the proof needed to support a position if the Internal Revenue Service, “IRS,” challenges an item on the corporate tax return, or if a third party desires to disregard the corporation for purposes of a lawsuit.

A corporation does provide limited liability to its officers, directors, and share holders. However, improperly recorded minutes can result in “piercing of the corporate veil.” This means officers, directors, and shareholders can be named in a lawsuit, which may hold them personally liable for corporate debts.

Corporate minutes also help distinguish between expenses and dividends. Expenses may be written off, while dividends are not deductible. If a discrepancy exists, the IRS, generally, will take a position adverse to the question of the expense which may change the expense to a dividend resulting in double taxation for the shareholders. In addition, if a corporation fails to keep minutes, the IRS can consider the shareholders of a closely-held corporate as individuals not operating as a corporation. This may lead to an allocation of net income to the shareholders at higher individual rates.

Corporate minutes may support justification of reasonableness of an employee’s salary rather than a disguised dividend. Also, minutes can justify increases in salary due to job performance or exceptional skills. The imposition of an accumulated earnings tax may be waived if the corporation shows that accumulation was for a valid business purpose. A properly maintained minute book also substantiates fringe benefits, and employment law liabilities.

While accurate corporate minutes may help to prove the existence of a corporation in a lawsuit, they can settle internal disputes as well, for example, the acceptance of contract, approval of mergers, authorization of loans, and compliance with governmental regulations. The corporate minutes are in place to inform and to protect the employees of a corporation. Basic topics for inclusion in the minutes are:

  • Election of the board and officers
  • Statement of corporate policies
  • Declaration of dividends
  • Authorize contracts involving the corporation
  • Compensation of officers and key employees
  • Loans to or from officers or shareholders
  • Plans liquidating or reorganizing the company
  • Intended use of corporate retained earnings
  • Purchase, lease, or sale of assets, including property
  • Write off of accounts receivable as bad debts
  • Acquisition or sale of treasury stock
  • Investigation of new business opportunities
  • Start of business operations in other states
  • Initiation, amendments & termination of retirement plans
  • Issuing and selling stock
  • Approval of financial statements

Form 8965- Health Coverage Exemptions (Obamacare/ACA)

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What is Form 8965- Health Coverage Exemptions?

The Affordable Care Act tax provision will affect federal individual income tax returns filed in 2015 for the 2014 tax year. Form 8965 is used to report a coverage exemption that is either granted by the Marketplace (also called the Exchange) or reported on your tax return. The form is also used to report any shared responsibility payments caused by you, or a member of your household, not having health care coverage or an exemption for that month.

 

Who must file this form?

If you are required to file a tax return and wish to claim a coverage exemption for yourself or another member of your tax household, the IRS requires you to file Form 8965.  On the other hand, if you are not required to file a tax return, your tax household is exempt from what the IRS calls the “shared responsibility payment” and you do not need to file a return to claim the exemption from coverage.

Premium Tax Credit – This is a tax credit for certain individuals who enroll, or whose family member enrolls, in a qualified health plan offered through a Marketplace.  This particular credit is designed to provide financial assistance to pay the premiums by reducing the amount of tax you owe, giving you a refund, or increasing your refund amount.

Individuals may be eligible if they:

  • Are not eligible for other qualifying coverage, such as government-sponsored or certain employer-sponsored coverage
  • Are within certain income limits
  • Do not file a Married Filing Separately tax return
  • Cannot be claimed as a dependent by another person

Individual Share Responsibility Provision

  • Most people already have health care coverage and will indicate this by checking a box on the return.
  • If you, or any of your dependents, do not have minimum essential coverage or do not have an exemption, you may need to make an Individual Shared Responsibility Payment when you file.
  • If you must make an Individual Shared Responsibility Payment, you will owe 1/12the of the annual payment for each month you or your dependents are without coverage.
  • For 2014, the annual payment amount is the greater of:
  • 1% of your household income that is above the tax return filing threshold* for your filing status, OR
  • Your family’s flat dollar amount ($95 per adult, $47.50 per child, Maximum amount of $285)

Coverage Exemptions

  • Individuals who do not have coverage or experience a gap in coverage may qualify for an exemption if
  • They do not have access to affordable coverage
  • They have a gap of less than three consecutive months without coverage
  • They qualify for one of several other exemptions:
  • Household income below filing threshold*
  • Certain noncitizens
  • Members of health care sharing ministry
  • Members of Federally-recognized Indian Tribes
  • Incarceration
  • Members of certain religious sects
  • Hardships
  • Gross income below filing threshold*
  • Two or more family member’s aggregate cost of self-only employee-sponsored coverage exceeds 8% of household income
  • Purchased insurance through Marketplace but experience a coverage gap
  • American Indian, Alaska Native or a spouse or descendant eligible for services through an Indian health care provider
  • Experienced homelessness, eviction, foreclosure, domestic violence, death of a close family member, unpaid medical bills that prevented you from obtaining coverage.
  • Do not have access to affordable coverage based on projected income.
  • Ineligible for Medicaid solely because the State does not participate in the Medicaid expansion under the Affordable Care Act.
  • Your have been notified that your health coverage will not be renewed and you consider other plans unaffordable.
  • Exemptions can be obtained in several ways. Some are from the Marketplace in the area where you live, others only from the IRS when you file your return, and others can be obtained from either the Marketplace or the IRS.

 

 

Filing Thresholds for Most People: And your age is:   Then you must file a return if your gross income is more than:
Single               Under 65 $10,150
   65 or older $11,700
Married filing Joint                            Under 65 (both spouses) $20,300
   65 or older (one spouse) $21,500
   65 or older (both spouses) $22,700
Married filing Separate  Any age $3,950
Head of Household  Under 65 $13,050
   65 or older $14,600
Qualifying Widow(er)  Under 65 $16,350
   65 or older $17,550

 

 

If you, or a member of your household, was granted a Marketplace exemption, complete Part I of Form 8965.

If you are claiming a coverage exemption on your tax return, complete Part II or III. You may need to complete more than one part of Form 8965.

 

‘Affordable’ Health Care information basics

Anibal Group LLC RealtyNetWorth.com Health Plan, Individual

Exemptions apply but you’ll need and Exemption Number from the exchange.Impossible_Seat[1]

Bring info to your tax appointment such as: 1095, history of months covered, etc.