Tax Archives - Page 40 of 45 - Whalen & Company, CPAs

Be prepared for the health care act’s “play or pay” provision

rlewis on May 7, 2013

The Patient Protection and Affordable Care Act of 2010’s shared responsibility provision, commonly referred to as “play or pay,” is scheduled to take effect Jan. 1, 2014. It doesn’t require employers to provide health care coverage, but it in some cases imposes penalties on larger employers that don’t offer coverage or that provide coverage that is “unaffordable” or that doesn’t provide “minimum value.”

A large employer is one with at least 50 full-time employees, or a combination of full-time and part-time employees that’s “equivalent” to at least 50 full-time employees. The nondeductible penalties generally are $2,000 per full-time employee.

Although the shared responsibility provisions don’t take effect until 2014, employers will use information about the workers they employ in 2013 to determine whether they’re subject to the provisions and face the potential for penalties in 2014. The rules are complex, so contact us today to learn how they may affect your business and what steps you can take to avoid, or at least minimize penalties.

Portability doesn’t preclude the need for marital transfers and trusts

lshuneson on April 24, 2013

Exemption portability, made permanent by the American Taxpayer Relief Act of 2012, provides significant estate planning flexibility to married couples if sufficient planning hasn’t been done before the first spouse’s death. How does it work? If one spouse dies and part (or all) of his or her estate tax exemption is unused at death, the estate can elect to permit the surviving spouse to use the deceased spouse’s remaining estate tax exemption.

But making lifetime asset transfers and setting up trusts can provide benefits that exemption portability doesn’t offer. For example, portability doesn’t protect future growth on assets from estate tax like applying the exemption to a credit shelter trust does. Also, the portability provision doesn’t apply to the GST tax exemption, and some states don’t recognize exemption portability.

Have questions about the best estate planning strategies for your situation? Contact us — we’d be pleased to help.

April 15 has passed — now what?

kbotti on April 19, 2013

With the 2012 tax filing season behind us, it’s time to start thinking seriously about 2013 tax planning — especially if you’re a higher-income taxpayer, because you might be subject to one or more significant tax increases this year:

Taxpayers with FICA wages and self-employment income exceeding $200,000 for singles and $250,000 for joint filers face an additional 0.9% Medicare tax on the excess.
Taxpayers with modified adjusted gross income exceeding $200,000 for singles and $250,000 for joint filers may face a new 3.8% Medicare tax on some or all of their net investment income.
Taxpayers with taxable income in excess of $400,000 for singles and $450,000 for joint filers face the return of the 39.6% marginal income tax rate — and of the 20% long-term capital gains rate on long-term capital gains and qualified dividends.

Contact me at karen.botti@whalencpa.com to learn whether you’re likely to be hit with these tax hikes and what strategies you can implement to minimize the impact.

Karen Botti is the staff manager of tax services. She has more than 30 years of experience in the public accounting field with extensive experience in preparing and reviewing federal, state and local income tax returns for businesses and individuals as well as for non-profit entities. She serves as a resource to clients and staff in multiple tax areas. Her areas of expertise also include like-kind exchanges, fixed-asset reporting, tax software and S-Corporation issues. She also has experience in accounting and the preparation of financial statements and payroll taxes.

The perils of filing for an extension

mnarog on April 10, 2013

Now that the 2012 tax return deadline is nearly upon us, if you haven’t filed your return yet, you may be thinking about an extension. This allows you to delay filing your return until the applicable extension deadline:

Individuals — Oct. 15, 2013
Calendar-year partnerships — Sept. 16, 2013
Trusts and estates — Sept. 16, 2013

While filing for an extension can provide relief from April 15 deadline stress, it’s important to consider the perils:

If you expect to owe tax, keep in mind that, to avoid potential interest and penalties, you still must (with a few exceptions) pay any tax due by April 15.
If you expect a refund, remember that you’re simply extending the amount of time your money is in the government’s pockets rather than your own.

Still, filing for an extension can be tax-smart if you’re missing critical documents or you face unexpected life events that prevent you from devoting sufficient time to your return right now. Please contact us if you have questions about avoiding interest and penalties.

IRS provides penalty relief to certain late filers

mnarog on April 9, 2013

On March 20, the IRS issued guidance providing penalty relief to both individual and business taxpayers who file for an extension of their 2012 tax return and ultimately owe additional tax — but only if they meet certain criteria. First, the reason for filing for the extension must be that the taxpayer’s 2012 return involved forms whose publication was delayed because of the American Taxpayer Relief Act of 2012 (ATRA), signed into law Jan. 2. Here’s a sampling of the delayed forms:

Form 8839: Qualified Adoption Expenses
Form 8863: Education Credits
Form 3800: General Business Credit
Form 5884: Work Opportunity Credit
Form 6765: Credit for Increasing Research Activities
Form 8844: Empowerment Zone Employment Credit
Form 8874: New Markets Credit

In addition, the taxpayer must make a good faith effort when filing for the extension to properly estimate the tax liability. Then that estimated amount must be paid by the return’s original due date, and any additional tax owed must be paid by the return’s extended due date.

If you’re considering filing for an extension due to delayed IRS forms, please contact us to help ensure you’ll qualify for penalty relief.

Category: Tax

News & Tech Tips

Be prepared for the health care act’s “play or pay” provision

Portability doesn’t preclude the need for marital transfers and trusts

April 15 has passed — now what?

The perils of filing for an extension

IRS provides penalty relief to certain late filers