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William Byrnes (Texas A&M) tax & compliance articles

Posts Tagged ‘Premium Tax Credit’

IRS Provides Obamacare Relief With Removal of Tax Penalties for Advanced Premium Tax Credit Payment

Posted by William Byrnes on January 27, 2015


Notice 2015-09 provides limited relief for taxpayers who have a balance due on their 2014 income tax return as a result of reconciling advance payments of the premium tax credit against the premium tax credit allowed on the tax return.

9dc30-6a00d8341bfae553ef01bb07b43355970d-piThis Notice provides limited relief for taxpayers who have a balance due on their 2014 income tax return as a result of reconciling advance payments of the premium tax credit against the premium tax credit allowed on the tax return. Specifically, this Notice provides relief from the penalty under § 6651(a)(2) of the Internal Revenue Code for late payment of a balance due and the penalty under § 6654(a) for underpayment of estimated tax. To qualify for the relief, taxpayers must meet certain requirements.  This relief applies only for the 2014 taxable year.

This relief does not apply to any underpayment of the individual shared responsibility payment resulting from the application of § 5000A because such underpayments are not subject to either the § 6651(a)(2) penalty or the §6654(a) penalty.

A taxpayer may receive assistance in paying premiums for coverage in a qualified health plan through advance payments of the premium tax credit. Advance credit payments are made directly to the insurance provider. The amount of the advance credit payments is determined when an individual enrolls in a qualified health plan through an Exchange and is based on projected household income and family size for the year of coverage. A taxpayer claims the premium tax credit on the income tax return for the taxable year of coverage. The amount of the credit is based on actual household income an family size for the year reflected on the tax return. Under § 36B(f)(2) and § 1.36B- 4(a)(1)(i) of the Income Tax Regulations, a taxpayer must reconcile, or compare, the amount of premium tax credit allowed on the tax return with advance credit payments.

Changes in the circumstances on which the advance credit payments are based could result in a difference between the amount of advance credit payments and the premium tax credit to which the taxpayer is entitled. If advance credit payments are more than the premium tax credit allowed on the return, the difference (excess advance payments) is treated as additional tax and may result in either a smaller refund or a larger balance due (or, if the premium tax credit allowed is more than the advance credit payments made, the excess credit amount may result in a larger refund or lower balance due).

Taxable year 2014 is the first year for which taxpayers will be required to reconcile advance credit payments with the premium tax credit.

The Service will abate the § 6651(a)(2) penalty for taxable year 2014 for taxpayers who (i) are otherwise current with their filing and payment obligations; (ii) have a balance due for the 2014 taxable year due to excess advance payments of the premium tax credit; and (iii) report the amount of excess advance credit payments on their 2014 tax return timely filed, including extensions (Line 46 of Form 1040 or Line 29 of Form 1040A).

Further, the Service will waive the § 6654 penalty for taxable year 2014 for an underpayment of estimated tax for taxpayers who have an underpayment attributable to excess advance credit payments if the taxpayers (i) are otherwise current with their filing and payment obligations; and (ii) report the amount of the excess advance credit payments on a 2014 tax return timely filed, including extensions.

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Premium Tax Credit Brings Changes to Your 2014 Income Tax Returns

Posted by William Byrnes on January 26, 2015


When filing your 2014 federal income tax return, you will see some 457c5-6a00d8341bfae553ef01b7c7029b32970b-pichanges related to the Affordable Care Act. Millions of people who purchased their coverage through a health insurance Marketplace are eligible for premium assistance through the new premium tax credit, which individuals chose to either have paid upfront to their insurers to lower their monthly premiums, or receive when they file their taxes. When you bought your insurance, if you chose to have advance payments of the premium tax credit, the Marketplace estimated the amount based on information you provided about your expected household income and family size for the year.

If you received the benefit of advance credit payments, you must file a federal tax return and reconcile the advance credit payments with the actual premium tax credit you are eligible to claim on your return.  You will use IRS Form 8962Premium Tax Credit (PTC) to make this comparison and to claim the credit. If your advance credit payments are in excess of the amount of the premium tax credit you are eligible for, based on your actual income, you must repay some or all of the excess when you file your return, subject to certain caps.

If you purchased your coverage through the Health Insurance Marketplace, you should receive Form 1095-A, Health Insurance Marketplace Statement from your Marketplace. You should receive this form by early February.

Form 1095-A will provide the information you need to file your taxes, including the name of your insurance company, dates of coverage, amount of monthly insurance premiums for the plan you and other members of your family enrolled in, amount of any advance payments of the premium tax credit for the year, and other information needed need to compute the premium tax credit.

Tax Facts on Individuals & Small Business

2014_tf_on_individuals_small_businesses-m_1Due to a number of recent changes in the law, taxpayers are currently facing many questions connected to important issues such as healthcare, home office use, capital gains, investments, and whether an individual is considered an employee or a contractor.  Financial advisors are continually looking for competitive information to help them provide the best answers for their clients and to obtain new clients.  National Underwriter’s Tax Facts series is the only resource written specifically for the financial advisor and producer providing fast, clear, and authoritative answers to pressing questions, and it does so in the convenient, timesaving, Q&A format for which Tax Facts is famous.

Anyone interested can try Tax Facts on Individuals & Small Business, risk-free for 30 days, with a 100% guarantee of complete satisfaction.  Call 1-800-543-0874.

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Are you paying too much or too little tax?

Posted by William Byrnes on August 7, 2014


IRS logoIn Summer Tax Tip 10-2014, the IRS disclosed that that many taxpayers will discover that they either get a larger refund or owe more tax than they expected next April 15, 2015.  But, the IRS stated, this type of tax surprise is controllable by the taxpayer.

One way to prevent owing more tax next April 15, plus interest and any penalty, or to avoid having too much tax withheld, is to adjust the amount of tax withheld from salary.

Another way to prevent interest and penalties on April 15th is to change the amount of estimated tax paid during the year.

Factors the IRS wants taxpayers to consider during the summer include:

•    New Job.   A taxpayer must fill out and submit Form W-4, Employee’s Withholding Allowance Certificate in order to begin new employment.  The employer will use the information provided by the taxpayer on this form to calculate the amount of federal income tax to withhold from the paycheck.

•    Estimated Tax.  A taxpayer may need to pay estimated tax directly to the IRS during 2014 BEFORE filing the April 15 tax return in 2015.  If a taxpayer earns income without withholding, such as self-employment, interest, dividends or rent, then it is likely that the taxpayer owes estimated tax.  For the year 2014, tax may be due also on June 16, 2014, on Sept. 15 in 2014, on Jan. 15, 2015, and of course, also on Wednesday, April 15, 2015.  Read more about estimated tax here.

•    Life Event Change.  Married?  New Child?  New House?  The Form W-4 or Estimated Tax calculation needs to be updated to reflect a marriage, a child, or the purchase of a new home.

•    Changes in Circumstances.  A taxpayer that receives advance payment of the Obama Care premium tax credit in 2014 must report changes in circumstances, such as changes in income or family size, to the Health Insurance Marketplace where the medical insurance was bought for the year.  Also, a taxpayer must notify the Marketplace if moving away from the geographic area covered by the Marketplace plan.  Read more here.

 

 

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The Obama Care “Premium Tax Credit” – 4 days left to take advantage

Posted by William Byrnes on March 27, 2014


On February 25, the IRS released Health Care Tax Tip 2014-03 reminding taxpayers that time is running out – only 4 days left – to enroll for health insurance coverage through the Health Insurance Marketplace.

However, the premium tax credit can help make purchasing health insurance coverage more affordable for people with moderate incomes. To be eligible for the premium tax credit, a tax filer must satisfy three rules:  

1.  Sign up for health insurance coverage through the Health Insurance Marketplace.  The open enrollment period to purchase health insurance coverage for 2014 through the Health Insurance Marketplace ENDS in 4 days on March 31, 2014!

2. Household income between one and four times the federal poverty line.  For a family of four for tax year 2014, that means income from $23,550 to $94,200.

3. Not eligible for other medical coverage, such as Medicare, Medicaid, or sufficiently generous employer-sponsored coverage.

If a  Marketplace determines the taxpayer is likely to qualify for the tax credit at the time of signup on the Health Insurance Marketplace, then the taxpayer has two choices:

1. Choose to have some or all of the estimated credit paid in advance directly to the medical insurance company to lower the pay out-of-pocket for the monthly premiums during 2014, or

2. Wait to receive the premium tax credit when the 2014 tax return is filed in 2015.  Waiting to receive the premium tax credit will either increase the tax refund or lower the balance due to the IRS.

For taxpayers choosing to receive the premium tax credit in advance, changes to income or family size will affect the credit eligible to receive.  If the credit on the 2014 tax return (filed in 2015) does not match the amount received in advance, the taxpayer will have to repay any excess advance payment, or you may get a larger refund if you are entitled to more. It is important to tell your Marketplace about changes in your income or family size as they happen during 2014 because these changes will affect the amount of your credit.

For more than half a century, Tax Facts has been an essential resource designed to meet the real-world tax-guidance needs of professionals in both the insurance and investment industries.

2014_tf_on_individuals_small_businesses-m_1Due to a number of recent changes in the law, taxpayers are currently facing many questions connected to important issues such as healthcare, home office use, capital gains, investments, and whether an individual is considered an employee or a contractor. Financial advisors are continually looking for updated tax information that can help them provide the right answers to the right people at the right time. This brand-new resource provides fast, clear, and authoritative answers to pressing questions, and it does so in the convenient, timesaving, Q&A format for which Tax Facts is famous.

“Our brand-new Tax Facts title is exciting in many ways,” says Rick Kravitz, Vice President & Managing Director of Summit Professional Network’s Professional Publishing Division. “First of all, it fills a huge gap in the resources available to today’s advisors. Small business is a big market, and this book enables advisors to get up-and-running right away, with proven guidance that will help them serve their clients’ needs. Secondly, it addresses the biggest questions facing all taxpayers and provides absolutely reliable answers that help advisors solve today’s biggest problems with confidence.”

tax-facts-online_mediumThe company also points out that the expert authors—Robert Bloink, Esq., LL.M., and William H. Byrnes, Esq., LL.M., CWM®—are delivering real-life guidance based on decades of experience.

The authors’ knowledge and experience in tax law and practice provides the expert guidance for National Underwriter to once again deliver a valuable resource for the financial advising community,” added Kravitz.

Anyone interested can try Tax Facts on Individuals & Small Business, risk-free for 30 days, with a 100% guarantee of complete satisfaction.  For more information, please go to www.nationalunderwriter.com/TaxFactsIndividuals or call 1-800-543-0874.

Posted in Taxation | Tagged: , , , , | 3 Comments »

Four Tax Facts about the Health Care Law for Individuals

Posted by William Byrnes on March 26, 2014


In Health Care Tax Tip 2014-06, the IRS alerted taxpayers to four basic tax tips about the new health care law.  The IRS stated that health insurance choices made now may affect the income tax return filed next year (2015).

1. Most people already have qualified health insurance coverage and will not need to do anything more than maintain qualified coverage throughout 2014.

2. If a taxpayer does not have health insurance through a job or a government plan, the taxpayer may be able to buy it through the Health Insurance Marketplace.  The open enrollment period to purchase health insurance coverage for 2014 through the Health Insurance Marketplace ENDS in 5 days on March 31, 2014!

3. If a taxpayer buy health insurance through the Marketplace, the taxpayer may be eligible for an advance premium tax credit to lower your out-of-pocket monthly premiums. (Tomorrow’s blog article will provide information about this advance premium tax credit.)

4. The 2014 tax return to be filed in 2015 will have a new tax question:  did you have insurance coverage or did you qualify for an exemption?  If not, the taxpayer may owe a shared responsibility payment.

What should you do now?

If a taxpayer or the family does not have health insurance, then talk to the employer about the employer’s health coverage offered, or visit the Marketplace online.

Find out more about the health care law and the Marketplace at www.HealthCare.gov.

Find out more about the premium tax credit and the shared responsibility payment at www.IRS.gov/aca.

For more than half a century, Tax Facts has been an essential resource designed to meet the real-world tax-guidance needs of professionals in both the insurance and investment industries.

tax-facts-online_medium

Due to a number of recent changes in the law, taxpayers are currently facing many questions connected to important issues such as healthcare, home office use, capital gains, investments, and whether an individual is considered an employee or a contractor. Financial advisors are continually looking for updated tax information that can help them provide the right answers to the right people at the right time. This brand-new resource provides fast, clear, and authoritative answers to pressing questions, and it does so in the convenient, timesaving, Q&A format for which Tax Facts is famous.

“Our brand-new Tax Facts title is exciting in many ways,” says Rick Kravitz, Vice President & Managing Director of Summit Professional Network’s Professional Publishing Division. “First of all, it fills a huge gap in the resources available to today’s advisors. Small business is a big market, and this book enables advisors to get up-and-running right away, with proven guidance that will help them serve their clients’ needs. Secondly, it addresses the biggest questions facing all taxpayers and provides absolutely reliable answers that help advisors solve today’s biggest problems with confidence.”

The company also points out that the expert authors—Robert Bloink, Esq., LL.M., and William H. Byrnes, Esq., LL.M., CWM®—are delivering real-life guidance based on decades of experience.

The authors’ knowledge and experience in tax law and practice provides the expert guidance for National Underwriter to once again deliver a valuable resource for the financial advising community,” added Kravitz.

Anyone interested can try Tax Facts on Individuals & Small Business, risk-free for 30 days, with a 100% guarantee of complete satisfaction.  For more information, please go to www.nationalunderwriter.com/TaxFactsIndividuals or call 1-800-543-0874.

Posted in Taxation | Tagged: , , , , | Leave a Comment »

 
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