Monday, February 23, 2015

Millions will OWE Obamacare tax Penalty!

Were you uninsured in 2014? Time to pay up!

Nearly 3 million to 6 million U.S. Citizens will have to pay an additional tax penalty (Shared Responsibility Payment) for not having health insurance last year, as stated by Treasury officials. This the first inclination given on estimates for how many people will be subject to this fine.
The penalty is $95 per person, or 1% of income above a certain threshold (roughly $20,000 for a couple). So you could end up owing the IRS hundreds to thousands of dollars.
For example: a married couple with $100,000 in income would have a penalty of $797, according to the Tax Policy Center ACA tax calculator.

The penalty for remaining uninsured rises to the larger of $325 per person or 2% of income in 2015.
As millions of Americans sit down in coming weeks with Obamacare's health insurance to compile their tax returns, they'll have to contend with this mandate for the first time.
Around three-quarters of the countries 150 million taxpayers have health coverage through their jobs or government programs and will simply have to check a box on their tax return.
Another 15 million to 30 million people will request and be granted an exemption to the mandate by filing Form 8965. Those who aren't subject to the insurance requirement include undocumented immigrants, low-income Americans and those for whom insurance premiums were more than 8% of their household income.
Finally, between 4.5 million and 7.5 million taxpayers received subsidies for insurance premiums when they signed up for coverage through healthcare exchanges. They will be required to fill out Form 8962 to reconcile their actual 2014 income with the amount they estimated when they applied for a policy in late 2013 or early 2014.
Those who underestimated their income will either receive smaller tax refunds or will owe the IRS money.
It is projected that some 3.4 million taxpayers will have to pay back part of their premiums.
Of course, those who overestimated their 2014 income may get a healthier-than-expected refund. And some will see no change at all.

Friday, February 3, 2012

10 most commonly missed income tax deductions:

Here is a list of what I have found to be 10 of the most commonly missed personal income tax deductions.
  1. State sales taxes – A few years back the IRS opened the door to allow us to deduct our State sales taxes paid in place our State income tax. This has proven to be very beneficial for those who live in a state with no state income taxes. So don't throw away all those receipts... they could add up to big tax savings.   
  2. Charitable contributions –We all know our tithes are deductible and rarely miss that one, but what gets forgotten about are the out-of-pocket expenses and the mileage. You are allowed to deduct any ou-of-pocket expenses incurred while providing a service to any non-profit organization. This would also include mileage to and from events/activities, picking up and dropping off supplies and to fulfill any callings or jobs for the organization.
  3. State tax you paid last spring – Did you know that if you owed state income taxes after filing last years return the amount you paid is deductible? Any tax payments made to the state are deductible even if they were payments for a prior year. 
  4. Refinancing points – How many of us have ever paid points when purchasing or refinancing a home? Did you know that those points are considered interest? Points from a home purchase or refinance can be deducted equally each year for the entire life of the mortgage. In some cases the points could be fully deductible in the year paid.  
  5. Child care credit – This credit can be taken as long as both parents have earned income or are listed as full-time students. The $ amount used to calculate the credit is $3,000per child up to $6,000. This can be useful if your child care costs exceeded your tax-favored reimbursement account at work. For example, if child care costs you $6,000 for the year, and you receive a $3,000 benefit from work, you may use the additional $3,000 towards the credit on your taxes.
  6. Earned Income Tax Credit – This is a substantial credit for low-to-moderate income workers that is very frequently overlooked or miscalculated. You could receive up to $5,571 of free money with this credit. 
  7. Student loan interest paid by Mom and Dad – You are probably already aware that your student loan interest you pay is deductible, but did you know that interest paid by your parents toward your loan is deductble also? If you are not claimed as a dependant the IRS now considers any monies paid by your parents towards your student loans as a gift to you. Its as though they gave you a cash gift and you used it to make your student loan payments. 
  8. Moving expense to take job – If your taking your first job out of college or your company is relocating you at your expense and the move is more than 50 miles away this deduction is for you. If you fall in this category you are allowed to deduct any costs related to the move including but not limited to mileage, tolls, parking, hotel, etc...    
  9. Jury pay paid to employer – Some employers will continue to pay your full salary while you are fulfilling your civic duty, but ask that you hand over your jury fees to the company. The only issue is that the IRS requires you to report those fees as taxable income. If you give the money to your employer you have the right to deduct the amount so your not taxed on money that you didn't et  to keep.
  10. Reinvested Dividends - Some of you may have no idea what this is...there isn't really a deduction here, but can save you a lot of money. It's also happens to be something that many taxpreparers miss. If you have your mutual fund dividends automatically reinvested in additional shares, don't forget that each reinvestment is considered an increases to your “tax basis” in the fund. By keeping track of your reinvested dividends you will reduce the amount of taxable capital gain (or increases the tax-saving loss) when you sell your shares. By forgetting to keep track of this you are overpaying your taxes, which nobody wants to do
-- No matter how big or small the deduction or credit may be, if you forget to include it you are giving the government more of your hard earned money than you really need to. If you want to make sure your not overpaying your taxes, come see us at Innovative Tax Solutions, we'll do all we can to make sure you keep more of your money!