Monthly Archives: October 2016

   Guide to Marketplace Open Enrollment

Marketplace Open Enrollment for 2017 health insurance is just around the corner, and whether you sign up for health insurance on healthcare.gov or through your state Marketplace, your local Dallas CPA is here to help guide you through the process. Whether you have had a change in life circumstance, are self-employed and need access to health insurance, or just shopping for an affordable plan, read on for information and tools that can help you enroll in a 2017 health insurance plan that makes sense for you, your family, and your budget.

Open Enrollment Dates

For 2017 health insurance coverage, Open Enrollment runs from November 1, 2016 to January 31, 2017. If you want your coverage to take effect on January 1, 2017, make sure to select your plan by December 15, 2016.

Helpful Tools for Open Enrollment

Selecting an insurance plan is an important financial decision. There are many free tools and calculators to arm you with all the information you need to choose the level of health care coverage that makes the most financial sense for you and your family.

The IRS has a free online tool that lets you know if you may qualify for a subsidy, or premium tax credit (assistance from the government), for 2017 and estimates how much you may receive to help pay your monthly health insurance premiums. Make sure to calculate your expected household income for the next year carefully, which is needed to figure how much assistance you may be eligible for to help pay for health insurance. Some consumers end up paying some money back on their tax returns if they underestimated their projected income. The more closely you calculate your household income, the easier it is to avoid any surprises come tax season. And if you received an advanced premium tax credit to help you pay for 2016 health insurance, your CPA will figure out if you are eligible for a bigger premium tax credit or have to pay some back when you file your taxes. No need to worry.

Penalty for Going without Coverage to Increase — Exemptions Can Help

Based on last year, it is expect that nearly 40% of uninsured tax filers will qualify for a penalty exemption on their tax returns for 2016, so it’s definitely worth checking into. Check out the IRS free online tool to determine if you’re eligible for an exemption.

If you don’t qualify for an exemption, the penalty is 2.5% of your total household adjusted gross income, or $695 per adult ($347.50 per child), whichever is higher (with a maximum of $2,085). For 2017 and beyond, the percentage option will remain at 2.5%, but the flat fee will include a cost-of-living adjustment.

Shopping around during this Open Enrollment will allow you to look for an affordable plan and could help you avoid paying a tax penalty when you file your 2017 taxes.

Reporting Coverage on Taxes

This is the third year taxpayers must report their health insurance status on tax returns, but there’s no reason to worry – this tax year will be just as simple as last year.

If you purchased a health insurance plan on healthcare.gov (CuidadodeSalud.gov for Spanish speakers) or your state Marketplace, you will receive Form 1095-A, which confirms coverage, premiums and any subsidies you received to help pay for health insurance.

People who were insured through their employer, a government program such as Medicaid, or other private insurance, will most likely receive a new tax form (1095-B or -C) confirming coverage or offer of coverage. If you receive these forms, simply review the forms for accuracy and keep the 1095-B or -C for your records – that’s it. You don’t need to wait for these forms to file your 2016 taxes.

Your local Dallas CPA is always up to date with the latest tax laws, and will continue to keep you informed so you have the latest information on how the ACA might affect you and your taxes. If you have more questions about the Affordable Care Act and your taxes, call your CPA today!

   Celebrate Fall with Ways to Save

What better way to celebrate Fall than by saving some money? With the temperature beginning to drop, it’s time to start looking around the house for ways to save on energy costs. Take advantage of some great tax credits and deductions for energy-efficient purchases.

The Residential Energy Efficient Property Tax Credit offers you some major tax breaks when it comes to purchasing qualifying energy-efficient appliances. The IRS is offering a credit on your tax return for 30% of the cost of alternative energy purchases – Wind Energy from Wind Turbines, Solar Energy from Solar Panel Systems, and Solar Hot Water Heaters.

Not only will these alternative resources save you money each month, but they’ll reduce the amount of taxes you owe, helping to turn your tax bill into a tax refund. What makes this credit even better is that there is no limit on the amount of available credit. Your credit is 30% of your qualified purchase for the following:

  • qualified solar electric systems;
  • qualified solar water heaters;
  • qualified fuel cell property;
  • qualified small wind energy property; and
  • qualified geothermal heat pumps.

The credit for expenditures made for qualified fuel cell property is limited to $500 for each one-half kilowatt of capacity of the property; the amounts of the other qualified expenditures eligible for the credit are not limited. In addition, this credit may be carried over if it exceeds the limitation imposed by section 26(a). The credit is available for property placed in service through Dec. 31, 2016.

The credit for solar electric property and solar water heating property is extended for property placed in service through December 31, 2021, at applicable percentages as described in the statute.

Don’t worry about memorizing the tax laws, your local Dallas CPA Firm can answer all your questions and tell you the tax deductions and credits you are eligible for.  So call today!

   7 Mistakes To Avoid When Reclassifying Employees

Organizations across the country are responding to the U.S. Department of Labor’s new overtime salary threshold by reclassifying some of their exempt employees into overtime-eligible nonexempts.

Starting Dec. 1, the new DOL rules take effect that nearly double the salary threshold at which most salaried workers become exempt from having to be paid overtime. The overtime ceiling will rise from $23,660 per year to $47,476. That means more than 4 million additional workers will qualify for overtime pay for the first time. So now is a great time to review your policies on when and how to pay hourly workers. Here are seven FLSA mistakes to avoid:

Mistake #1: Not paying for all work time. When they were exempt, these employees probably worked lots of hours to get the job done. And you appreciated that. But now managers need to track and control employees’ excess work hours. This may entail redistributing work or increasing staffing levels. It also means requiring employees to get manager approval to work overtime and recognizing that employees’ prework or postwork activities are compensable if those activities are principal activities that benefit the employer, and not the worker. (Example: the employee answering texts or emails at home, after hours.)

Mistake #2: Not paying employees who work through meal breaks. Employees don’t need to be paid for meal breaks if they are at least 30 minutes long and people are completely relieved from work. Watch out: Some time-keeping systems automatically deduct time for meal breaks, whether or not employees are relieved during the time.

Mistake #3: Not paying employees for waiting time. Employees who wait around for work must be paid. (Example: Call center employees who spend time waiting for work areas to become available after their shifts started had to be paid for that time.)

Mistake #4: Not paying employees for travel time. Employees’ commuting time isn’t compensable. This is true even if people go from home to the first job of the day and return home after the last job. But hourly employees’ travel time to different job sites during the day is compensable.

Mistake #5: Miscalculating overtime pay. Employees earn overtime at 1.5 times their regular rates of pay. As a general rule, any payment that’s measured by or based on employees’ hours worked, production or efficiency must be included in wages for purposes of determining the regular rate of pay.

Mistake #6: Not paying telecommuters for all hours worked. Employees who work from home must be paid for every hour worked. Problem: getting them to keep track of their hours. Idea: You may come to a reasonable agreement with telecommuters regarding their work hours. Agreements should account for their agreed working hours and be written, signed and dated.

Mistake #7: Averaging hours worked during different weeks in a pay period. Employees are paid based on a workweek — a continuous 168-hour period. Employees who work 60 hours during one week and 24 hours during the second week of a two-week pay period must be paid overtime for the 20 overtime hours worked during the first week. You can’t average hours over those two weeks, which would result in an overtime liability of only two hours.

Whether you are an employer or employee, please visit the U.S. Department of Labor’s website or consult with your local Dallas CPA Firm if you have any questions about reclassifying employees or your own classification!

   New IRS Private Debt Collection Program

The Internal Revenue Service has announced it’s new debt collection program and that it plans to begin private collection of certain overdue federal tax debts next spring and has selected four contractors to implement the new program.

The new program, authorized under a federal law enacted by Congress last December, enables these designated contractors to collect, on the government’s behalf, outstanding inactive tax receivables. As a condition of receiving a contract, these agencies must respect taxpayer rights including, among other things, abiding by the consumer protection provisions of the Fair Debt Collection Practices Act. The IRS has selected the following contractors to carry out this program:

CBE Group 1309 Technology Pkwy Cedar Falls, IA 50613

Conserve 200 CrossKeys Office park Fairport, NY 14450

Performant 333 N Canyons Pkwy Livermore, CA 94551

Pioneer 325 Daniel Zenker Dr Horseheads, NY 14845

These private collection agencies will work on accounts where taxpayers owe money, but the IRS is no longer actively working their accounts. Several factors contribute to the IRS assigning these accounts to private collection agencies, including older, overdue tax accounts or lack of resources preventing the IRS from working the cases.

The IRS will give each taxpayer and their representative written notice that their account is being transferred to a private collection agency. The agency will then send a second, separate letter to the taxpayer and their representative confirming this transfer.

Private collection agencies will be able to identify themselves as contractors of the IRS collecting taxes. Employees of these collection agencies must follow the provisions of the Fair Debt Collection Practices Act and must be courteous and respect taxpayer rights.

The IRS will do everything it can to help taxpayers avoid confusion and understand their rights and tax responsibilities, particularly in light of continual phone scams where callers impersonate IRS agents and request immediate payment.

Private collection agencies will not ask for payment on a prepaid debit card. Taxpayers will be informed about electronic payment options for taxpayers on IRS.gov/Pay Your Tax Bill. Payment by check should be payable to the U.S. Treasury and sent directly to IRS, not the private collection agency.

The IRS will continue to keep taxpayers informed about scams and provide tips for protecting themselves. The IRS encourages taxpayers to visit IRS.gov for information including the “Tax Scams and Consumer Alerts” page. For more information visit the Private Debt Collection page on IRS.gov or ask your local Dallas CPA Firm for more details.