Personal Exemption Phaseout & PEASE

What do PEP and PEASE stand for? In the fiscal cliff deal, Congress surprisingly reinstated two additional tax increases. The Personal Exemption Phaseout (PEP) and “Pease,” the limitation on itemized deductions, were 2 tax policies revived beginning January 1, 2013. Itemized deductions (except for medical expenses, investment interest, casualty and theft losses, and gambling losses) phase out as AGI tops certain thresholds. You’ll lose 3 cents of deductions for every dollar of income over the … [Read more...]

Group Health Insurance for Small Groups

Certified Tax Coach Q & A: Group Health Insurance for Small Groups Q: Should we assume it will be difficult to get group health insurance for small groups as it is now? A: My personal opinion on the matter is that with the new rules becoming enforced, we’ll start to see a shift in how group health insurance for small groups is obtained in this country. The significant thing about the employer scenario in particular, is that the size of the penalty is much smaller than what many employers … [Read more...]

Opting Out of Obamacare

Certified Tax Coach Q & A: Opting Out of Obamacare What about employees who may be covered under a spouse's plan, is there still a penalty for employees who have opted out of the company plan ? The employer mandate requires only that coverage be “offered” to employees and their dependents. We interpret this to mean that if such coverage is offered and an employee declines it, there is no penalty if the employee obtains coverage. We will not have a definitive answer to this question until … [Read more...]

Healthcare Reform Marketing Tax Practice

A lot of insurance brokers are advertising that they can help implement PPACA. What are they targeting? Are they selling insurance or are they giving tax advice? Great question and you’ve identified an outstanding marketing opportunity. What we ARE seeing right now are insurance agents using the new healthcare law as a marketing tool. They are using this sense of urgency created by the open enrollment period to generate policy sales. What we are NOT seeing right now are tax advisors … [Read more...]

Are employee reimbursements for insurance deductible?

Related to the Small Employer Healthcare Tax Credit, can the employer reimburse the employee or does he need to have a plan? “Qualified Health Plans” may be offered through cafeteria plans by qualified employers. For tax years beginning after December 31, 2013, a reimbursement (or direct payment) for the premiums for coverage under any “qualified health plan” through a Health Insurance Exchange is a qualified benefit under a cafeteria plan if the employer is a qualified employer (the small … [Read more...]

Those Pesky 1099 Rules

Thankfully this is true!  The 2010 healthcare legislation and the Small Business and Jobs Act of 2010 included two new sets of rules.  Together, these rules added significantly to the paperwork burdens of business owners (and their accountants!) The attempted 1099 changes were finally quashed by the Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011 (try saying that 10 times!)  This is outstanding news for businesses and rental property … [Read more...]

Section 105 Plan

Section 105 Plan How can you "hire" a spouse in a sole proprietorship without having to pay a wage, and where do you report it? A Section 105 plan allows the employee-spouse to be given tax-free reimbursement checks to pay for substantiated heal costs incurred for the employee-spouse, their spouse, who just happens to be the business owner who is your client, and their dependent children.  In other words, the client's whole family is covered! KEY POINT: The IRS admits this strategy … [Read more...]

Reasonable Compensation

Ask Certified Tax Coach -Reasonable Compensation Rules Question: "Please elaborate on the reasonable compensation matter. How is it possible to have a one person business and split earnings between reasonable compensation and distributions. How does this help with the Medicare surcharge in 2013?" Answer: Certified Tax Coach, Dominique Molina, CPA CTC While we all have differing preferences on the proper allocation of wages and distributions in an S corp- it is helpful to gain an … [Read more...]