Reporting Health Coverage on IRS Forms

While most taxpayers will simply need to check a box on their tax return to indicate they had health coverage for all of 2015, there are a few forms and specific lines on forms 1040, 1040A, and 1040EZ that relate to the health care law. To help navigate health coverage reporting, you should consider filing your return electronically. Using tax preparation software is the best and simplest way to file a complete and accurate tax return as it guides you through the process and completes all the math for you. There are a variety of electronic filing options, including: free volunteer assistance, IRS free File for taxpayers who qualify, commercial software, and professional assistance.

Information about reporting health coverage: Form 8965, Health Coverage Exemptions:

  • Complete this form if you need to claim a coverage exemption on your return or report a marketplace-granted coverage exemption.
  • Use the worksheet in the Form 8965 Instructions if you need to calculate the shared responsibility payment.
  • Form 8962, Premium Tax Credit: Complete this form to claim this credit on your tax return, and to reconcile advance payments of the premium tax credit.
  • Form 1095, Health Care Information Forms: If you enrolled in coverage through the Health Insurance Marketplace, you should receive Form 1095 A, Health Insurance Marketplace Statement, which will help complete form 8962. Wait to file until you receive this form.
  • Your health coverage provider or your employer may furnish you with a Form 1095-B, Health Coverage, or Form 1095-C, Employer-Provided Health Insurance Offer and Coverage. You do not have to wait to receive these forms before you file your tax return.

Form 1040:
Line 46: Enter advance payments of the premium tax credit that must be repaid.
Line 61: Report health coverage or enter individual shared responsibility payment.
Line 69: Report net premium tax credit if the allowed premium tax credit is more than advance credit payments paid on your behalf.

Form 1040-A:
Line 29: Enter advance payments of the premium tax credit that must be repaid.
Line 38: Report health coverage or enter individual shared responsibility payment.
Line 45: Report net premium tax credit if the allowed premium tax credit is more than the advance credit payments paid on your behalf.

Form 1040-EZ:
Line 11: Report health coverage or enter individual shared responsibility payment.
Form 1040EZ cannot be used to report advance payments or to claim the premium tax credit.

For more information about the Affordable Care Act and your income tax return, contact Jack McCarty MAI, CPA, EA LLC, at www.justcalljack.com or call 502-327-8009.

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Hire a great tax professional

Tax preparation commercials are all over TV, radio, and billboards. Even if you’ve filed your own tax return in the past, it is very important to talk to a licensed tax professional/enrolled agent or CPA because of the huge tax increase and new type of taxes in the Affordable Care Act/ObamaCare. You want someone who is recognized by the IRS as a tax professional. Someone who understands tax law very well and can understand your tax situation, including all your tax deductions and credits available to you. The IRS will not review your tax returns, missing credits or deductions. The IRS only makes adjustments if you leave income off your return.

5 tips to choose the right tax professional for you:

1. Start looking now. Looking now for a licensed tax professional will save you the hassle and time. The licensed tax professional needs to be well-versed in all of the recent tax law changes and tax codes. The sooner you find the right professional, the sooner you can start the filing process and ultimately get your tax refund.
2. Check the preparer’s qualifications. Make sure your preparer is qualified. Just because they work in a nice store front or they have purchased a software package does not mean they are a qualified Licensed Tax Professional. There are two types of Licensing: CPA, They are licensed by the state board of accountancy, Enrolled Agents, licensed by US dept. of Treasury – the IRS calls them the “elite” tax Professionals.
3. Avoid Fraud: Per IRS, fraud runs very high among unlicensed tax preparers. Think about it, these unlicensed preparers have your social security number, your address, your income, your children’s names and date of birth. They have everything to either sell to someone else or commit huge identity fraud or tax fraud on you.
4. Check the preparer’s History. Check your preparer’s history by conducting your own research through various sources. Enrolled Agent: kyenrolledagents.com or CPA society. Also ask friends, family or co-workers for references.
5. Never sign a blank Return. It’s important to review your tax return completely and ask questions before signing it. You are ultimately responsible for what is reported on your tax return. Make sure the preparer signs your tax return and signs their PTIN number.

Selecting a tax preparer is a very important decision. After all, for most Americans the annual income tax return is the single largest financial transaction that they have each and every year. Pick someone you trust that is Licensed as an EA or CPA. These Individuals have the skills and experience to help you get the biggest refund you deserve for this year and years to come.

At Jack McCarty MAI, CPA, EA LLC, we appreciate your business and strive hard to keep you informed on tax policy that affects you. As always, don’t hesitate to Just Call Jack at 502-327-8007 and let him prepare your taxes today!

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Protecting Americans from Tax Hikes Act of 2015

With tax season looming, Congress has passed the “Protecting Americans from Tax Hikes Act of 2015” (Tax Extender Bill). In an effort to ensure you’re armed with the laws that apply to 2015 tax returns, we have outlined a partial list of extended items below.

Late as usual, Congress finally passed legislation dealing with more than 50 tax provisions that expired December 31, 2014. With year-end tax planning reaching critical mass and tax season looming, taxpayers, tax preparers, tax software programmers, and the IRS are all breathing a sigh of relief now that we know what law applies to 2015 tax returns.

It is good news for those of us that dreaded the last minute frenzy of late legislation that some tax provisions were made permanent. Others were extended from two to five years. Also, notice that beginning in 2016, there are modifications to some provisions.

Right now, a few of our clients will need an urgent phone call to tell them that an IRA transfer to charity is OK again or that the purchase of machinery or a business vehicle with a placed in service date before year end can reap a big tax incentive.

The following is a partial list of the items extended, made permanent and/or modified in the extender bill. A complete list is included in the text of H. R. 2029, the “Protecting Americans from Tax Hikes Act of 2015.”
IRC   Individual Provisions   NEW Expiration Date
§24(d)  Enhanced American Opportunity tax credit is made permanent. Beginning in 2016, the provision requires the taxpayer claiming the American Opportunity credit to report the EIN of the educational institution to which the individual made tuition payments.

Provision made permanent

  • 25A    Enhanced child tax credit is made permanent

Provision made permanent

§25C      (g)(2)  Mortgage insurance premium deduction as mortgage interest

December 31, 2016
§32(b)  Enhanced earned income tax credit is made permanent.

Provision made permanent
§62     $250 teacher supply deduction is made permanent.

Beginning in 2016, the provision also indexes the $250 cap to inflation and includes professional development expenses.

Provision made permanent
§108    Exclusion for personal residence COD income is extended to Dec. 31, 2016.

December 31, 2016
§163    Mortgage insurance premium deduction as mortgage interest is extended to Dec. 31, 2016.

December 31, 2016
§164    Election for itemizers to deduct sales tax in lieu of income tax is made permanent.

Provision made permanent
§170    Contributions of real property for qualified conservation purposes is made permanent.

Provision made permanent
§222    Tuition deduction is extended to Dec. 31, 2016.

December 31, 2016
§408    IRA transfers to charity in lieu of RMDs is made permanent.

Provision made permanent
IRC     Business Provisions     NEW  Expiration Date
§41     R & D tax credit is made permanent. Beginning in 2016 eligible small businesses ($50 million or less in gross receipts) may claim the credit against AMT liability, and the credit can be utilized by certain small businesses against the employer’s payroll tax liability.

Provision made permanent
§45P    Wage credit for activated military reservists is made permanent. Beginning in 2016, the provision modifies the credit to apply to employers of any size, rather than employers with 50 or fewer employees, as under current law.

Provision made permanent
§51     WOTC for employers hiring qualified veterans and employees from other targeted groups is extended to Dec. 31, 2019. Beginning in 2016, the provision also modifies the credit to apply to employers who hire qualified long-term unemployed individuals (i.e., those who have been unemployed for 27 weeks or more) and increases the credit with respect to such long-term unemployed individuals to 40% of the first $6,000 of wages.

December 31, 2019
§132    Increased fringe benefit allowance for transit passes is made permanent

Provision made permanent
§168    Bonus depreciation for qualified purchases is extended with revisions to Dec. 31, 2019(50% in 2015 – 2017, 40% in 2018 and 30% in 2019). The provision modifies the AMT rules beginning in 2016 by increasing the amount of unused AMT credits that may be claimed in lieu of bonus depreciation. The provision also modifies bonus depreciation to include qualified improvement property and to permit certain trees, vines, and plants bearing fruit or nuts to be eligible for bonus depreciation when planted or grafted, rather than when placed in service.

December 31, 2019
§168    Election to accelerate AMT credit in lieu of bonus depreciation is extended to Dec. 31, 2019.

December 31, 2019
§168    15-year recovery period for qualified leasehold improvements, qualified restaurant property, and qualified retail improvements is made permanent.

Provision made permanent
§170    Enhanced charitable deductions for food inventory is made permanent. Beginning in 2016, the provision modifies the deduction by increasing the limitation on deductible contributions of food inventory from 10% to 15% of the taxpayer’s AGI (15% of modified taxable income in the case of a C corporation) per year. The provision also modifies the deduction to provide special rules for valuing food inventory.

Provision made permanent
§179    $500,000 expensing limit is made permanent. Beginning in 2016, the provision modifies the expensing limitation by indexing both the $500,000 and $2 million limits for inflation and by treating air conditioning and heating units placed in service in tax years beginning after 2015 as eligible for expensing.

Provision made permanent
§179    Treatment of certain real property as §179 property is made permanent. Beginning in 2016, the provision modifies the expensing limitation with respect to qualified real property by eliminating the $250,000 cap.

Provision made permanent
§1202   100% gain exclusion for qualified small business stock is made permanent.

Provision made permanent
§1367   Basis adjustment to S corporation stock for charitable contributions is made permanent.

Provision made permanent
§1374   Reduced built in gains recognition period for S corporations is made permanent at five years.

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Your Rights as a Taxpayer

As a taxpayer, the congress has given you some rights that the IRS must recognize. I believe it is important to inform you of those rights. My goal in this post is for you to understand these rights, which enable you both to meet your tax responsibilities and still maintain your financial dignity, so that you may support yourself and your family.

Tax Payer Bill of Rights

  1. The Right to be Informed

You have the right to know all laws, IRS procedures, instructions, notices, and correspondence to comply with tax laws.

  1. The Right to Quality Service

You have the right to receive prompt and courteous assistance when dealing with the IRS. Communications should be clear and easily understandable.

  1. The Right to pay no more than the correct amount of Tax

You have the right to only pay the amount legally due. Check your IRS tax transcript(s) often.

  1. The Right to challenge the IRS’s position and be heard

You have the right to raise objections and provide additional documentation in response to IRS actions. You should also know that they must consider your position before a final outcome is decided.

  1. The Right to appeal an IRS decision in an independent forum

You are entitled to a fair and impartial administrative appeal of most IRS decisions. Generally, you have a right to take your case to court if the tax issue or the amount owed is too egregious.

  1. The Right to Finality

You have the right to know the amount of time you have to challenge the IRS’s position, as well as, the timeframe that the IRS has to audit a particular tax year. You also should be informed when the IRS has completed an audit.

  1. The Right to Privacy

The IRS must not be more intrusive than necessary with its dealings with you.

  1. The Right to Confidentiality

The information provided to the IRS should never be disclosed unless you have given them authorization to do so.

  1. The Right to retain Representation

You do not have the take on the IRS alone. One of the services I offer is IRS Tax Representation. Call me, Jack, if you need any assistance with dealing with the IRS.

  1. The Right to a Fair and Just Tax System

You should expect our tax system to consider all facts and circumstances that may affect your ability to pay, or ability to provide information on time. If your dealings with the IRS are going nowhere, or even if it seems lost in the IRS bureaucracy, you may qualify for assistance from the Taxpayer Advocate Service.

I have been a private businessman in the metro Louisville area for 40 years. I base my reputation on being the very best accountant possible for my clients and providing my services to them at reasonable fees. Please do not hesitate to contact me at 502-327-8009 if you need any tax audit help, IRS tax representation, or overall tax help.

Source: Publication 1 (rev.12-2014) Catalog Number 64731W Department of the Treasury Internal Revenue Service www.irs.gov

 

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When to File an Amended Return

As a Certified Public Accountant, I know the importance of filing an Amended Return and when to file a refund claim, but do you? Of course, I will provide help on your taxes, but I believe that it is important for every tax advisor to inform their clients on every “why” and “when” in certain taxation processes.

Filing an amended Return is needed if you overpaid taxes, failing to take allowable deductions or credits. To report any additional claims or issue a refund, you need to use Form 1040X (Amended U.S. Individual Income Tax Return). You use the same form when you need to change your filing status (single or joint taxpayer). However, it is important to note that you cannot switch filing status after the due date for the return. You do not need to file a return claim if you have overpaid taxes on wages or salary. There is a 20% penalty charge for an unwarranted refund. This is a costly mistake that you do not want to make. This is when it is important to seek a tax advisor.

You may file a refund claim on the 1040X form within 3 years, or within 2 years from the time you paid your tax. Some returns are barred with a 3 year “look back” rule. If you filed an agreement that give the IRS an extended statutory period against you, you are allowed an additional period to which a file can by made in certain amounts.

Failure to file a timely refund claim is detrimental. Mailing a refund claim so that it is postmarked by the due date (including extensions), using the US Postal Service, qualifies as “timely”.

Just Call Jack if are you needing any tax help.

Credit to Source: J.K Lasser’s Your Income tax 2011

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