April 22

Wills, trusts, powers of attorney and advanced healthcare directives—all are components of what is known as estate planning.

While estate planning may not be something you want to think about, having a solid estate plan in place ensures that your loved ones will be taken care of after you are gone. It also helps to minimize probate costs and estate taxes.

Because every person’s estate planning needs will be different, it’s important to seek the advice of a lawyer. An attorney can let you know if a will is all you will need or if a multi-pronged approach is necessary.

If you’re ready to embark on estate planning, here are five important considerations.

1. What Is Your Ultimate Goal?

Your estate planning goals will vary depending on whether you are married, have children and own a home and/or a business. A more elaborate estate plan will also be necessary if you have extensive assets. If you have minor children, a business or estate tax concerns, a trust may be the best bet; in other cases a will may suffice.

2. Assign & Review Beneficiaries

Make sure you have assigned beneficiaries for all financial assets including Life Insurance and Tax-deferred Retirement Accounts. You can also designate your bank or stock accounts as transfer or payable on death. Exercise additional care if a trust is the designated beneficiary of a retirement plan to allow the beneficiary to continue deferring tax recognition. Review your beneficiaries any time you change jobs or experience life-changing events such as a divorce or death in the family.

3. Identify Special Bequests of Non-monetary Assets

Be sure to assign beneficiaries for things such as your car and/or jewelry.

4. Appoint a Person to Carry Out Your Wishes

Carefully select the person you would like to serve as executor of your will or your trustee. If you have minor children, you may need to appoint a guardian. Then draw up an advanced healthcare directive and financial power of attorney. Both are key in the event you become incapacitated.

5. Address Potential Tax Issues

If estate taxes are a concern, implement annual gifting to your beneficiaries. If the goal is to make charitable contributions, consider using taxable assets such as IRAs.

For more information on estate planning contact us today!

February 5

What are my obligations under the Affordable Care Act (ACA)?

The requirements under the Affordable Care Act (ACA), commonly referred to as Obamacare, went into effect on January 1, 2014.  ACA requires all U.S. citizens (and certain non U.S. citizens) meet the requirement to carry “minimum essential coverage” for health care unless they had a “qualifying exemption”.

When filing your 2014 taxes you will report for each month, whether you and your dependents carried qualifying health care coverage or had a qualifying exemption.  If neither requirement was met, you will be assessed and must pay a shared responsibility payment for each month the requirement was not met.

What is “minimum essential coverage”?

A health care plan or arrangement specifically identified under the law as providing minimum essential coverage, including:

  • Government sponsored programs like Medicare Part A, Medicare Advantage, most Medicaid, TRICARE and CHIP programs, and comprehensive health care coverage for veterans;
  • Employer-sponsored group health plans (including self-insured programs);
  • Qualified insurance obtained through the Healthcare marketplace or through individual plans purchased from an insurance company;
  • Grandfathered health plans (plans in existence prior to ACA’s enactment that have not changed since its enactment); and
  • Other plans or programs that the Department of Health and Human Services has recognized as minimum essential coverage.

For more information on whether your plan qualifies, go to http://www.irs.gov/Affordable-Care-Act/Individuals-and-Families/ACA-Individual-Shared-Responsibility-Provision-Minimum-Essential-Coverage.

What is a “qualifying exemption”?

Some individuals may qualify for an exemption because of:

If you believe that you or your dependents qualify for an exemption, you should apply as soon as possible.  Even if you failed to apply for an exemption if you believe that you may qualify you should inform your tax professional.

How will I report compliance with ACA on my 2014 tax return?

You will report for each month in 2014 that you and every dependent on your return carried qualifying coverage or had a qualifying exemption.  If you obtained coverage during a month, the law considers you to have coverage for the entire month.

  • Qualifying Coverage for the Entire Year: If you and your dependents had qualifying coverage every month in 2014, you simply check the box on Form 1040, 1040A or 1040EZ indicating full-year coverage.
  • Coverage Obtained Through the Healthcare Marketplace:  If your coverage was obtained through the Healthcare Marketplace and you received a subsidy, you will receive Form 1095-A reporting the subsidy amount.  This subsidy must be reported on your tax return or the processing of your return may be delayed. If you received a subsidy, your actual household income on the 2014 return will be compared to the projected household income you entered when applying for healthcare coverage.  If actual household income was less than projected income, you are eligible for an additional subsidy.  If actual income was more, you are required to repay the excess subsidy you received.
  • Qualifying Exemption: If you had a qualifying exemption every month in the year, you must claim this exemption on Form 8965 and file it with your tax return.
  • No Coverage or Part-Year Coverage: If you had no coverage or coverage for just part of the year, you must calculate your shared responsibility payment on Form 8965 and file it with the tax return.  The shared responsibility payment reduces any refund you are due on the return.  If no refund is due, the shared responsibility payment will be added to the tax you owe on the return.

How is the shared responsibility payment calculated?

For 2014, the shared responsibility payment is calculated as:

  • The greater of:

Percentage of Income:  1% of your household income that is above the tax return filing threshold for your
filing status;  or

Flat Dollar Amounts: Your family’s flat dollar amount, which is $95 per adult and $47.50 per child under the
age of 18, limited to a family maximum of $285.

  • Maximum Cap: the maximum amount owed is capped at the national average cost of a bronze level health plan available through the Marketplace. In 2014, this was $204 per month per individual or $1,020 per month for a family of five.

For example, a married couple with three children under the age of 18 with a   household income of $160,000, and no coverage or qualifying exemption for the entire year would pay $1,397 because the Percentage of Income is greater than the Flat Dollar Amount but is less than the Maximum Cap.

The Percentage of Income and Flat Dollar Amounts increase each year.  In 2015, the percentage is 2% and flat dollar amounts are $325 per adult and $162.50 per child.  In 2016, the percentage of income is 2.5% and the flat dollar amounts are $695 per adult and $347.50 per child.  After 2016, these figures will be increased for inflation.

For questions regarding the Affordable Care Act and how it affects you and your business please contact Terri Brunsdon, CPA, Esq., at 330-374-1166.

January 15

Terri recently sat down with Suzanne Kearns of Intuit Quickbooks to discuss what options small-business owners have available to them when they find themselves behind in their taxes owed to the IRS. Here are some highlights from Terri’s interview:

Small Business Center: What are some of the reasons that small-business owners fall behind in their taxes owed to the IRS?

Terri Brunsdon: One example is that a business suffers an economic slump and, instead of paying taxes, it pays vendors. The biggest issue I encounter is a business’s failure to remit payroll tax withholdings. Because payroll withholdings are fiduciary taxes (meaning it has been collected from employees on behalf of the IRS), the IRS will hold the business owners, accountant, and any other responsible parties personally liable for the tax.

What power does the IRS have over business owners to force them to pay overdue taxes?

If a business fails to pay its taxes, the IRS can levy and lien its assets. To levy means the IRS seizes financial assets, usually cash in bank accounts or payments from customers. On the other hand, a lien is public notice that the IRS has a priority claim on the business’s assets that must be satisfied before they may be sold. A lien also affects the credit rating of the business. If the unpaid tax is fiduciary, the IRS can levy or lien the assets of the owners and any other responsible party.

To learn more about Terri’s advice to small-business owners, read the full interview from Intuit Quickbooks.

February 28

On February 26, 2014, the Ohio Senate passed bill S.B.243 that authorizes an annual three-day sales tax holiday the first Friday in August. The bill covers items such as computers (less any manufacturer’s rebate) costing $1,000 or less, computer supplies (less manufacturer’s rebate) costing $750 or less, clothing costing $100 or less, school supplies costing $20 or less and school instructional materials costing $20 or less. The legislation was co-sponsored by Senators Faber, Hit, Hughes, Jones, Lehner, Obhof, Oelslager and Schaffer. The bill now goes to the House for approval.