Individuals May Get New Health Care Information Forms This Year

Starting this year, you may receive one or more forms providing information about the health care coverage that you had or were offered during 2015. Much like Form W-2 and Form 1099, which include information about the income you received, these forms provide information about your health care coverage that you may need when you file your individual income tax return. Two of these forms are new this year and on is a form that was sent to some taxpayers in 2015.

The new forms are:

Form 1095-B, Health Coverage.

  • Health insurance providers send this form to individuals they cover, with information about who was covered and when.

Form 1095-C, Employer-Provided Health Insurance Offer and Coverage

  • Certain employers send this form to certain employees, with information about what coverage the employer offered. Employers that offer health coverage referred to as “self-insured coverage” send this form to individuals they cover, with information about who was covered and when.

The deadline for insurers, other coverage providers, and certain employers to provide Forms 1095-B and 1095-C is March 31, 2016. Some taxpayers may not receive a Form 1095-B or Form 1095-C by the time they are ready to file their 2015 tax return. While the information on these forms may assist in preparing a return, they are not required; it is not necessary to wait for Forms 1095-B or 1095-C in order to file.

The form that was first issued last year is:

Form 1095-A, Health Insurance Marketplace Statement

  • The Health Insurance Marketplace sends this form to individuals who enrolled in coverage through the Marketplace.  The form includes with information about the coverage, who was covered, and when.

The deadline for the Marketplace to provide individuals with Form 1095-A is February 1, 2016.  If you are expecting to receive a Form 1095-A, you should wait to file your 2015 income tax return until you receive that form.

You are likely to get more than one form if you had coverage from more than one coverage provider, if you worked for more than one employer that offered coverage or if you enrolled for coverage in the Marketplace for a portion of the year and received coverage from another source for part of the year. You are also likely to get more than one form if you changed coverage or employers during the year or if different members of your family received coverage from different coverage providers. You should not attach any of these forms to your tax return but should keep them with your tax records.

John S. Wood, C.P.A., P.A. is located at 15310 Amberly Drive, Suite 250, Tampa, FL 33647 and concentrates in individual and business tax preparation and planning. We can be reached at 813-514-2920. Please also visit our website is www.jwoodcpa.com.

Are Your Social Security Benefits Taxable?

Your Social Security benefits may be taxable. This may be the case only if you have other substantial income (such as wages, self-employment, interest, dividends and other taxable income that must be reported on your return) in addition to your benefits. It depends on how much income you report to the IRS. Your income and filing status affect whether you must pay taxes on your Social Security.

If Social Security is your only source of income, your benefits may not be taxable. You also may not need to file a federal income tax return.

If you do have to pay taxes on your Social Security benefits, you can make quarterly estimated tax payments to the IRS or choose to have federal taxes withheld from your benefits.

Each January you will receive a Social Security Benefit Statement (Form SSA-1099) showing the amount of benefits you received in the previous year.

A quick way to find out if any of your benefits may be taxable is to first add one-half of your Social Security benefits to all of your other income, including tax-exempt interest. This is known as your “provisional income.” Next compare this total to the base amounts below. If your total is more than the base amount for your filing status, then some of your benefits may be taxable. The three base amounts are:

  • $25,000 – for single, head of household, qualifying widow or widower with a dependent child or married individuals filing separately who did not live with their spouse at any time during the year
  •  $32,000 – for married couples filing jointly
  • $0 – for married persons filing separately who live together at any time during the year

If that income is between $25,000 and $34,000 on a single return or between $32,000 and $44,000 on a joint return, up to 50% of your benefits can be taxed. The rest is tax free.

If your provisional income is more than $34,000 on a single return or $44,000 on a joint return, it’s likely that 85% of your benefits will be taxed.

If you have questions about this or other tax matters, please call us today at 813-514-2920.

John S. Wood, C.P.A., P.A. is located at 15310 Amberly Drive, Suite 250, Tampa, FL 33647 and concentrates in individual and business tax preparation and planning. We can be reached at 813-514-2920. Please also visit our website is www.jwoodcpa.com.

IRS Tax Tips for Starting a Business

The IRS offers five tax tips that can help you get your business off to a good start in the IRS Summertime Tax Tip 2015-15:

When you start a business, a key to your success is to know your tax obligations. You may not only need to know about income tax rules, but also about payroll tax rules.

1. Business Structure. An early choice you need to make is to decide on the type of structure for your business. The most common types are sole proprietor, partnership, and corporation. The type of business you choose will determine which tax forms you will file.

2. Business Taxes. There are four general types of business taxes. They are income tax, self-employment tax, employment tax and excise tax. In most cases, the types of tax your business pays depends on the type of business structure you set up. You may need to make estimated tax payments. If you do, use IRS Direct Pay to pay them. It’s the fast, easy and secure way to pay from your checking or savings account.

3. Employer Identification Number. You may need to get an EIN for federal tax purposes. Search “do you need an EIN” on IRS.gov to find out if you need this number. If you do need one, you can apply for it online.

4. Accounting Method. An accounting method is a set of rules that you use to determine when to report income and expenses. You must use a consistent method. The two that are most common are the cash and accrual methods. Under the cash method, you normally report income and deduct expenses in the year that you receive or pay them. Under the accrual method, you generally report income and deduct expenses in the year that you earn or incur them. This is true even if you get the income or pay the expense in a later year.

5. Employee Health Care. The Small Business Health Care Tax Credit helps small businesses and tax-exempt organizations pay for health care coverage they offer their employees. A small employer is eligible for the credit if it has fewer than 25 employees who work full-time, or a combination of full-time and part-time. The maximum credit is 50 percent of premiums paid for small business employers and 35 percent of premiums paid for small tax-exempt employers, such as charities.

The employer shared responsibility provisions of the Affordable Care Act affect employers employing at least a certain number of employees (generally 50 full-time employees or a combination of full-time and part-time employees). These employers’ are called applicable large employers (ALEs). These ALEs must either offer minimum essential coverage that is “affordable” and that provides “minimum value” to their full-time employees (and their dependents), or potentially make an employer shared responsibility payment to the IRS. The vast majority of employers will fall below the ALE threshold number of employees and, therefore, will not be subject to the employer shared responsibility provisions.

Employers also have information reporting responsibilities regarding minimum essential coverage they offer or provide to their full-time employees. Employers must send reports to employees and to the IRS on new forms the IRS created for this purpose.

Get answers to all of your questions about starting a business and by contacting us for a free consultation. Call 813-514-2920 today to schedule an appointment. You can also visit www.jwoodcpa.com.

Key Points to Know about Early Retirement Distributions

Before you take any money out of a retirement plan, you should consider the potential impact it could have on the amount of income tax you might have to pay.

Some people take an early withdrawal from their IRA or retirement plan. Doing so in many cases triggers an added tax on top of the income tax you may have to pay. Here are some key points you should know about taking an early distribution:

1.Early Withdrawals.  An early withdrawal normally means taking the money out of your retirement plan before you reach age 59½.

2.Additional Tax.  If you took an early withdrawal from a plan last year, you must report it to the IRS. You may have to pay income tax on the amount you took out. If it was an early withdrawal, you may have to pay an added 10 percent tax.

3.Nontaxable Withdrawals.  The added 10 percent tax does not apply to nontaxable withdrawals. They include withdrawals of your cost to participate in the plan. Your cost includes contributions that you paid tax on before you put them into the plan.

A rollover is a type of nontaxable withdrawal. A rollover occurs when you take cash or other assets from one plan and contribute the amount to another plan. You normally have 60 days to complete a rollover to make it tax-free.

4.Check Exceptions.  There are many exceptions to the additional 10 percent tax. Some of the rules for retirement plans are different from the rules for IRAs. See IRS.gov for details about these rules.

5.File Form 5329.  If you made an early withdrawal last year, you may need to file a form with your federal tax return. See Form 5329, Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts, for details.

IRS Provides Tip On What Income Is Taxable

The IRS has provided some guidance on what income may or may not be taxable in IRS Tax Tip 2015-4.

All income is taxable unless the law excludes it. Here are some basic rules you should know to help you file an accurate tax return:

  • Taxed income.  Taxable income includes money you earn, like wages and tips. It also includes bartering, an exchange of property or services. The fair market value of property or services received is taxable.

Some types of income are not taxable except under certain conditions, including:

  • Life insurance.  Proceeds paid to you because of the death of the insured person are usually not taxable. However, if you redeem a life insurance policy for cash, any amount that you get that is more than the cost of the policy is taxable.
  • Qualified scholarship.  In most cases, income from this type of scholarship is not taxable. This means that amounts you use for certain costs, such as tuition and required books, are not taxable. On the other hand, amounts you use for room and board are taxable.
  • State income tax refund.  If you got a state or local income tax refund, the amount may be taxable. You should have received a 2014 Form 1099-G from the agency that made the payment to you. If you didn’t get it by mail, the agency may have provided the form electronically. Contact them to find out how to get the form. Report any taxable refund you got even if you did not receive Form 1099-G.

Here are some types of income that are usually not taxable:

  • Gifts and inheritances
  • Child support payments
  • Welfare benefits
  • Damage awards for physical injury or sickness
  • Cash rebates from a dealer or manufacturer for an item you buy
  • Reimbursements for qualified adoption expenses

Let Your New Tampa CPA Provide Your Business With Reliable, Low Cost Payroll Services

Using our payroll service allows you to free up your time and do what you do best – take care of your customers and grow your business.

We can provide your business with payroll services at fees that are up to 75% lower than ADP or PayChex.

When we provide you with payroll services, we promise to do the following: 1) Pay your employees on time. 2) Pay your payroll taxes on time. 3) File your payroll tax forms accurately and on time.

Call us today at 813-514-2920 in Hillsborough or 727-943-7136 in Pinellas, or email us at info@jwoodcpa.com to schedule an appointment to discuss your payroll needs and to get a free quote.