“Worst Filing Season Ever” Predicted For Taxpayers

I just got hung up on by the IRS...again!
I just got hung up on by the IRS…again!

IRS Commissioner John Koskinen recently suggested that the 2015 tax filing season could be misery for taxpayers and IRS employees alike. Between extensive wait times to speak to a representative, implemented laws that have not yet been reflected in the tax code and congressional gridlock, this may be the worst tax season on record.

“The filing season is going to be the worst filing season since I’ve been the National Taxpayer Advocate [in 2001]…” said National Taxpayer advocated Nina Olson.  “…I’d love to be proved wrong, but I think it will rival the 1985 filing season when returns disappeared.”

The major obstacles for this year are as follows:

  • The IRS budget has been slashed.  While the House has tried to reduce the budget, the Senate has proposed to increase the budget by $240 Million.  Even in the slim chance that it passes, that increase would still amount to a 7% decrease to the IRS’ 2010 budget.
  • Multiple laws congress has passed, the IRS has yet to implement into its systems.  The Affordable Care Act (ACA), The Foreign Account Tax Compliance Act (FACTA) and other laws require information from health care providers and other agencies in order to process tax returns correctly…and that is before the antiquated computer systems of the IRS have to be updated
  • The uncertainty surrounding “Tax Extenders”; multiple tax laws that either need to be extended, adjusted and/or replaced.  There are currently over 50 of them.  If these laws are not addressed before December, the tax season itself could be delayed

Until all these issues are resolved, you can expect extra long waits and dropped calls at the IRS like last year when nearly half of the phone calls to the IRS went unanswered.

With all this uncertainty, if there was ever  year to have the help of a qualified tax professional, this is it. Contact R&G Brenner today to find out how we can help you.  “Saving you time and money is what we’re all about”.

Source: Forbes

Understanding Obamacare: How The Affordable Care Act Will Affect Your Taxes

How The ACA Affects Your Taxes
How The ACA Affects Your Taxes

Certain provisions of the Patient Protection and Affordable Care Act (PPACA) are set to take effect in 2014, some of which may have an impact on taxpayers. The PPACA, more colloquially known as “Obamacare,” is the new healthcare law that sets up either a state or government run health exchanges. Along with the change in healthcare accessibility comes a change in taxes.

Whether you agree or disagree with the new law, there’s a good chance that your taxes will be affected by it in one of four major ways:

  • You could receive a tax credit to help you pay insurance premiums.
  • You will experience a tax increase on Medicare if you fall within a certain income bracket.
  • You will have an increased tax on any investment income if you fall within a certain tax bracket; or,
  • You will be penalized, via tax, for not purchasing some form of healthcare.

Receiving a Tax Credit

If you qualify (eligibility is determined by income, family size, and age) then you will receive a tax credit that will help you to pay your health insurance premiums at the start of 2014. In order to be entitled to the tax credit, an individual must earn between 100%-400% of the federal poverty line, or approximately between $11,000-$46,000 dollars a year. For a family of four, a family must earn less than $94,000 to receive any portion of a tax credit. 

Tax Increases on Medicare

If you make over $200,000 dollars a year as an individual or $250,000 collectively as a couple, the new law adds an additional 0.9% tax on your payroll taxes to pay for the Medicare expansion. The 0.9% tax will automatically be withheld from an individual’s paycheck if the individual earns more than $200,000 per year. However, if you make less than $200,000 per year on your own but are married and you and your spouse make $250,000 dollars or more collectively, the 0.9% won’t be withheld from your taxes—and you will be responsible for paying that amount at tax time. 

Tax Increase on Investment Income

Just like the changes in the Medicare tax, this tax increase also focuses on individuals making more than $200,000 dollars per year or couples who collectively make more than $250,000 per year. Unlike the Medicare tax, though, this hike only applies to a tax filer’s adjusted gross income rather than total income. Those who fall within this income category are responsible for an additional 3.8% investment income tax

Being Taxed for Lacking Insurance Coverage

One of the components of the Affordable Care Act—known as the Shared Responsibility Provision —specifies that obtaining health insurance in mandatory, and a fee will be incurred by anyone choosing not to purchase insurance. The tax will present itself in one of two ways in 2014:

  • You will be charged 1% of your income tax, or
  • You will be charged $95.00 per year (whichever one is more is what you’ll be responsible for).

The fee for failing to obtain insurance increases thereafter:  In 2015 it’s 2% of your income, and in 2016 it’s 2.5% of your income or $695 per person (the maximum fee per family is $2,085). Thereafter, the penalty is increased based on the cost-of-living adjustment. The idea is to eventually charge a fee that’s more or or less in line with the cost of obtaining health insurance, encouraging people to opt into the exchange rather than pay a high fee and received nothing in return.

Please let us know your experience in the comments section below–positive or negative–as it relates to obtaining health insurance on the newly created exchanges.

R&G Brenner Launches Insurance Division

RGB Lauches Insurance Divison

Yasmin D. Brenner has been tapped to lead R&G Brenner’s newly created Insurance division.  The Affordable Care Act (ObamaCare) is now in effect, which means that every citizen must have health insurance which meets a minimum standard of coverage by March 31st, 2014 or be assessed a monetary penalty (this penalty can grow to over $2000 per family by 2016!).

R&G Brenner is offering it’s clients a free consultation for those that either need Health Insurance or would like to explore alternatives to reduce their health care costs.  If you’d like more information about our new Insurance Division, please click here, or contact us directly at healthcare@rgbrenner.com to schedule your appointment & free consultation today.

Biggest Tax Law Changes For 2014

irs-logo-tax-1040-form
The Biggest Tax Changes For 2014

With the upcoming tax season already delayed, and many tax proposals still being debated in a contentious congress, Chad Fisher over at gobanking.com lists the 5 biggest changes for the 2014 tax season taxpayers can expect:

1. FICA and Medicare Taxes

Last year, many filers noticed a startling increase in their taxes thanks to FICA tax hikes.

FICA, or the Federal Insurance Contribution Act, includes both Social Security and Medicare taxes. The current FICA tax rate is 7.65 percent. Higher-income earners might be facing an additional 0.9 percent tax, which results in an effective tax rate of 2.35 percent for single taxpayers who earn more than $200,000 and joint filers who earn more than $250,000 a year.

Self-employed taxpayers pay 15.3 percent in FICA taxes, because they don’t have an employer with which to share the cost.

These increases were due in part to the projected cost of Social Security growing faster than its income. While there will be no tax increase this year related to FICA, the wage base is slated to increase.

The wage base is the maximum amount of income that can be taxed for Social Security purposes. In 2013, the wage base was $113,700; this year, the wage base is predicted to increase to $115,500.

2. Exemptions and Deductions

The tax code is designed to accommodate inflation. Although many Americans are extremely wary of inflation, this adjustment can actually help taxpayers save. Adjustments ensure that filers are in the appropriate tax bracket, but they also affect tax breaks such as exemptions and standard deductions.

In 2014, these adjustments could save middle-income married couples as much as $200. Single filers will see savings, as well. Personal exemptions will also be adjusted for inflation, and limits for IRA contributions, education credits and similar benefits will increase.

Some taxpayers could still benefit from itemizing their deductions; anyone interested in doing so should discuss options and scenarios with a licensed tax professional.

3. The Affordable Care Act

The Patient Protection and Affordable Care Act could well be the biggest change to taxes in 2014. Employers with more than 50 full-time equivalent employees will be facing a tax penalty if they fail to provide affordable essential health coverage to their employees.

Individuals who fail to purchase coverage might also be subject to a penalty. Adults could be facing a fine of $95, while the penalty for uninsured children will be $47.50. This fine will increase annually and, by 2016, will be $695 per adult or 2.5 percent of the total household’s taxable income, whichever is greater.

On the flip side of the penalty are new tax credits and subsidies. Employers with fewer than 50 full-time employees and non-profit organizations could be eligible for tax credits if they meet the minimum coverage requirements.

Individuals will not receive tax credits but could be eligible for subsidies that help them purchase coverage through state or federal health insurance exchanges.

4. Students Loans

Many struggle to pay their student loans after graduation. In 2014, students who receive loans to fund their education will have more affordable payments that will not exceed 10 percent of their income.

Some students will be eligible to have their debts forgiven after a decade, including those who are in the military, and those who work as nurses or teachers. Other students could also be eligible for debt forgiveness after 20 years.

5. Other Tax Law Changes

Other changes have also been proposed. One proposal that is estimated to reduce the deficit by $44 billion over the next decade would repeal tax preferences for oil, gas and coal producers.

New jobs and wage increases could offer a temporary 10 percent tax credit, and investing in advanced energy manufacturing would also merit new tax credits.

Additional proposals have been made to create small-employer tax credits, expand the child and dependent care tax credit, and reform the low-income housing tax credits. The federal tax on tobacco products and cigarettes may be increased as well.

Many of the tax law changes on the horizon would be beneficial to a large percentage of taxpayers. Both refundable and non-refundable tax credits could significantly decrease the tax burden of individuals or couples. However, it is important that wage earners discuss their unique situations with a tax professional.

If you have any questions regarding these or other potential 2014 tax law changes, please contact an R&G Brenner tax professional today, or let us know in the comments section below.

Source: gobanking.com