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Tax Tip of the Week | No. 265 | Back-to-School Tax Tips August 27, 2014

Posted by bradstreetblogger in : Deductions, General, tax changes, Tax Planning Tips, Tax Preparation, Tax Tip, Taxes , add a comment

Tax Tip of the Week | Aug 27, 2014 | No. 265 | Back-to-School Tax Tips

Another school year is upon us…

Most K-12 expenses are not deductible. This includes private school tuition and any required uniforms.  For children under the age of 13, the cost of before or after school day care may qualify you for a tax credit.

If you provide any volunteer services for your child’s school, your time is not deductible.  However, you can take a charitable deduction for any volunteer miles that you drive (0.14/mile) or any out-of-pocket expenses.

One of the best ways to save for college is to fund a “529” savings plan.  You must invest in the Ohio CollegeAdvantage plan if you want to take a deduction on your Ohio tax return.  Be sure to let grandparents know if they make contributions for their grandkids, they can also take a deduction on their Ohio tax return.  These types of savings plan grow tax-free and distributions made for eligible college expenses are nontaxable.

There are three different credits and deductions available for college expenses.  These include: The American Opportunity Credit, the Lifetime Learning Credit and the Tuition and Fees Deduction.  Each of these has its own set of rules that go beyond the scope of this Tax Tip.

Once you are out of school, you may take a deduction of up to $2,500/year on the interest payments made on the loans.

Good luck to all the returning students!

You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504.  Or visit our website.

Rick Prewitt – the guy behind TTW

…until next week.

Tax Tip of the Week | No. 264 | No Change to Social Security Depletion Date August 20, 2014

Posted by bradstreetblogger in : General, tax changes, Tax Planning Tips, Tax Preparation, Tax Tip, Taxes, Taxes, Uncategorized , add a comment

Tax Tip of the Week | Aug 20, 2014 | No. 264 | No Change to Social Security Depletion Date

Here’s an article that we thought would interest you…

The Social Security Board of Trustees reports the combined asset reserves of the Old-Age and Survivors Insurance, and Disability Insurance (OASDI) Trust Funds are projected to become depleted in 2033.

This is unchanged from the last two years, with 77% of benefits still payable at that time. The DI Trust Fund will become depleted in 2016, also unchanged from last year’s estimate, with 81% of benefits still payable.

The combined trust fund reserves are still growing and will continue to do so through 2019. Beginning with 2020, the cost of the program is projected to exceed income. The projected actuarial deficit over the 75-year long-range period is 2.88% of taxable payroll—0.16 percentage point larger than in last year’s report.

“The projected depletion dates of the Social Security Trust Funds have not changed, and three-fourths of benefits would still be payable after depletion. But the fact remains that Congress can ensure the long-term solvency of this vital program by taking action,” says Carolyn W. Colvin, Acting Commissioner of Social Security. “The Disability Insurance Trust Fund’s projected depletion year remains 2016, and legislative action is needed as soon as possible to address this financial imbalance.”

Other highlights of the Trustees Report include:

•    Income including interest to the combined OASDI Trust Funds amounted to $855 billion in 2013. ($726 billion in net contributions, $21 billion from taxation of benefits, $103 billion in interest, and $5 billion in reimbursements from the General Fund of the Treasury—almost exclusively resulting from the 2012 payroll tax legislation);

•    Total expenditures from the combined OASDI Trust Funds amounted to $823 billion in 2013;

•    Non-interest income fell below program costs in 2010 for the first time since 1983. Program costs are projected to exceed non-interest income throughout the remainder of the 75-year period;

•    The asset reserves of the combined OASDI Trust Funds increased by $32 billion in 2013 to a total of $2.76 trillion;

•    During 2013, an estimated 163 million people had earnings covered by Social Security and paid payroll taxes;

•    Social Security paid benefits of $812 billion in calendar year 2013. There were about 58 million beneficiaries at the end of the calendar year;

•    The cost of $6.2 billion to administer the program in 2013 was a very low 0.7% of total expenditures; and

•    The combined Trust Fund asset reserves earned interest at an effective annual rate of 3.8% in 2013.

You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504.  Or visit our website.

Rick Prewitt – the guy behind TTW

…until next week.

Tax Tip of the Week | No. 263 | IRS Releases Draft Forms for ObamaCare August 13, 2014

Posted by bradstreetblogger in : General, tax changes, Tax Preparation, Tax Tip, Taxes, Taxes , 1 comment so far

Tax Tip of the Week | Aug 13, 2014 | No. 263 | IRS Releases Draft Forms for ObamaCare

Get ready for all of these new forms….

The Internal Revenue Service recently released draft versions of several forms for employers and individuals to comply with the Affordable Care Act, along with draft versions of more common forms such as the 1040 and 1040EZ for next filing season.

Form 1094-B, the draft form for Transmittal of Health Coverage Information Returns, is a short form that asks for the filer’s name, Employer Identification Number, the name of the person to contact and their contact information, along with the number of Forms 1095-B submitted with the transmittal.

Form 1094-C, a draft version of the Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns, asks for information about the “applicable large employer member,” or ALE member. An “applicable large employer” is considered to be an employer with 50 or more full-time employees or full-time equivalent employees.

Form 1095-A provides a draft form for the Health Insurance Marketplace Statement, which asks for information about the recipient and the coverage household, including covered individuals, their dates of birth, coverage periods, monthly premium amounts, the monthly premium amount of the “second lowest cost silver plan” (which is used as a benchmark for determining the Premium Tax Credits available to members of a household), the amount of the monthly advance payment of the Premium Tax Credit, along with other details.

Form 1095-B, a draft version of the Health Coverage form, requests information about the “responsible individual,” or policy holder, along with information on employer-sponsored coverage (such as the employer’s name, address and Employer Identification Number), and a section on the covered individuals.

Form 1095-C is the draft form for Employer-Provided Health Insurance Offer and Coverage. It includes spaces for the offer of coverage, the employee share of lowest cost monthly premium for self-only minimum value coverage, along with fields for the covered individuals and their Social Security numbers.

Form 8941, the draft form for the Credit for Small Employer Health Insurance Premiums, asks questions such as whether the employer paid premiums during the tax year for employee health insurance coverage provided through a Small Business Health Options Program Marketplace or if the employer qualifies for an exception to this requirement. The form relies on information from worksheets for calculating full-time equivalent employees, state premium subsidies and other information.

Form 8962, a draft version of the Premium Tax Credit form, includes sections for the annual and monthly contribution amount, the Premium Tax Credit claim and a reconciliation that must be performed of any advance payment of the Premium Tax Credit, repayment of excess advance payment of the Premium Tax Credit, shared policy allocations, and an alternative calculation for the year of marriage.

Form 8965, a draft version of the form for Health Coverage Exemptions, is for people who have been granted a coverage exemption from one of the marketplace for health insurance plans. The form requests Social Security numbers and exemption certificate numbers of any individuals who have been granted exemptions. It also asks whether they are claiming a hardship exemption or other coverage exemption because their household income or gross income falls below a filing threshold.

Looks like another interesting tax season next year!

You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504.  Or visit our website.

Rick Prewitt – the guy behind TTW

…until next week.

Tax Tip of the Week | No. 262 | An Obamacare Update August 6, 2014

Posted by bradstreetblogger in : General, tax changes, Tax Planning Tips, Tax Preparation, Tax Tip, Taxes, Taxes , add a comment

Tax Tip of the Week | Aug 6, 2014 | No. 262 | An Obamacare Update

Conflicting Court Rulings On ACA Tax Credits

Earlier last week, two courts in two different districts issued opposing decisions regarding tax credits for those who bought health insurance through federal exchanges.

The court in Halbig v. Sebelius ruled that the IRS didn’t have the statutory authority to expand the scope of tax credits to include individuals who bought health insurance through federal exchanges, as the initial regulations only mentioned state exchanges. Whereas, the court in King v. Burwell upheld that the tax credits should be available to all individuals regardless of the exchange they used to purchase their health insurance.

IRS Commissioner John Koskinen told a House subcommittee on July 23 that the IRS doesn’t plan on making any changes to processing or procedures as a result of the courts’ decisions. At this time, nothing will change, but stay tuned.

You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504.  Or visit our website.

Rick Prewitt – the guy behind TTW

…until next week.