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Archives for January 2014

Are You Eligible for Health Insurance Tax Credits?

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Tax Tips are not a substitute for legal, accounting, tax, investment or other professional advice. Always consult with your trusted accounting advisor before acting upon any Tax Tip.

Are You Eligible for Health Insurance Tax Credits?

The Affordable Care Act (ACA) can save your small business money through its tax credits.

If your small business has employees, you’ve undoubtedly been paying attention to the news coming out of Washington, D.C., about the Affordable Care Act (ACA). This law was designed to be implemented in waves, rather than all at once, and there have been major changes since it was passed and signed.

Some elements of the ACA have already been incorporated into the health care industry. One of these benefits is a tax credit for the health insurance costs you pay for your employees. For the years 2010-2013, small businesses could take a tax credit of 35 percent of the premiums paid for health insurance. Small tax-exempt businesses got a credit of 25 percent.

Starting in 2014, small business owners can take a tax credit up to 50 percent of the premiums they paid for health insurance. Tax-exempt small business owners’ credit will be 35 percent. This credit can be claimed for two consecutive tax years.

To be eligible for this credit, you will have to meet the following requirements:

  • You must pay at least 50 percent of the cost of employee-only health care coverage for each of your employees.
  • You must also have fewer than 25 full-time equivalent employees. This means the average number of hours worked by your employees is greater than or equal to 40 hours a week.
  • The average wage of the employees covered must be less than $50,000 per year. This amount will be adjusted for inflation every year.

You will have had to pay premiums on behalf of your employees who are enrolled in a qualified health plan offered through a Small Business Health Options Program (SHOP) Marketplace. However, if you qualify for an exception to the requirement to buy health insurance through a SHOP Marketplace, you can still take this credit.

This credit is refundable. This means that if you are a small business employer and did not owe tax during the year, you can get a refund on your return, which can be carried back or forward to other tax years. In addition, if you are an eligible small business, you can claim a business expense deduction for the premiums that are in excess of the credit.

In other words, not only do you get to take a credit for these costs, but you can also take a deduction for employee premium payments.

However, keep in mind that you are eligible to receive the credit and have it be refundable as long as it does not exceed your income tax withholding and Medicare tax liability. Further, if you are a small tax-exempt employer, any refund payments you receive are subject to sequestration.

Estate Tax Lessons – Learn From Philip Seymour Hoffman’s Mistakes

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Tax Tips are not a substitute for legal, accounting, tax, investment or other professional advice. Always consult with your trusted accounting advisor before acting upon any Tax Tip.

Estate Tax Lessons – Learn From Philip Seymour Hoffman’s Mistakes

Fans around the world were stunned, shocked, and saddened to learn of Actor Philip Seymour Hoffman’s death. He has brought so many wonderful characters into our homes and hearts over the years and was continuing to do so with recent film endeavors. As devastated as fans were over his passing, it doesn’t hold a candle to what his closest friends and family felt.

The only people happy about his passing were likely to be at the IRS, which will be enjoying a windfall of nearly $15 million from Hoffman’s estate. While your estate may not have quite the $35 million worth Hoffman’s estate had, there are things you can learn from his mistakes that will help your family hang on to a much bigger portion of the estate you leave behind.

Update Your Will Frequently
At the time of his death in 2014, it had been nearly 10 years since the last time Mr. Hoffman updated his will. Two of his children were left out of the will as a result. They had not even been born when his will was last updated.

It’s true, no one wants to consider life after you’re gone, but it’s important to plan and provide for the people you love most. Updating your will ensures that no one is left out.

Marry your Partner
Whenever possible, it’s important to marry your partner. Had Hoffman and his long-time partner been married, he could have left her the entire estate without the IRS getting involved at all. You can give as much money to your spouse in life and in death, as you would like without your spouse paying taxes on that money. In this instance, it would have saved Mimi O’Donnell, his long-time partner, a cool $15 million in taxes.

Keep it Private
Establishing a revocable trust would have kept the details of Mr. Hoffman’s will private. Not only would we not be discussing it here, but no one would know the nitty gritty details of what was going on with the estate. If you value your privacy or have a spouse, partner, or children who value their privacy, it’s a small step that nets big benefits for everyone involved.

Work with an Estate Specialist
Another place where Mr. Hoffman went wrong was working with a real estate attorney to handle the details of his estate, instead of an estate specialist. It’s tempting to go with the people you know who are attorneys rather than venture out to find one who specializes. In this event, with all the taxes and tax laws involved, it’s in your best interest to work with someone who focuses on estate planning and wills rather than someone who dabbles in them.

The world has been robbed of a great presence on the silver screen. His family has been robbed of a sizable sum of money that should belong to them. Don’t let this happen with your family. Consult with your accountant today to make sure your estate plan is up-to-date and adequate to meet the needs of your family, while also protecting the privacy of all parties involved.

Filed Under: IRS

Steps to Take When Your Sensitive Data is Breached

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Tax Tips are not a substitute for legal, accounting, tax, investment or other professional advice. Always consult with your trusted accounting advisor before acting upon any Tax Tip.

Steps to Take When Your Sensitive Data is Breached

Roughly 267 million records exposed during data breaches just in 2012 alone, the global information services organization Experian estimates. With numbers like these, most businesses find that it’s not a matter of “if” their data will be breached, but “when” it’s going to happen.

With data breaches becoming such a common problem for people and businesses alike, occurring roughly eight million times each month according to IBM, it’s important to know the steps to take once you become aware a data breach has occurred in order to properly protect your business, your reputation, and your financial interests,

Create a Data Breach Action Plan
It’s necessary now, before breaches occur, to create an action plan to follow when they do occur. These are a few of the steps small business owners should include in any response plans involving data breaches.

  • Discover and investigate the breach internally.
  • Contact law enforcement officers if this is a case where that might apply (hacking is a crime)
  • Notify financial institutions you do business with. Change account numbers or close accounts as appropriate.
  • Engage the services of professionals to assist with the investigation as well as the potential fallout for your business. This may include computer forensic investigation firms, data recovery specialists, law firms, crisis management teams, and/or PR firms.
  • Notify customers and employees who have been directly affected by the breach and purchase identify theft protection services for those who were affected. Many states have laws regarding notifications involving data breaches. Make sure you know the law in your state so that you’re in compliance.
  • Get ahead of the breach in the media. It’s best to be proactive with statements regarding the breach, so that you control the narrative. This protect you from the need to do damage control after someone else goes public with their version of events first.
  • Keep those who were affected by the breach up to date about what’s going on through notifications in the mail or via email. Give customers and employees details, facts, and information about what’s going on and steps they can take to protect themselves.
  • Respond to questions and inquiries. Transparency dispels thoughts that you are trying to hide things from a concerned public. For small businesses this may involve hiring someone to field calls and calm concerns.

The key is to stay on top of things from start to finish. How you deal with the fallout says a lot about you as a business and will determine whether or not your customers choose to ride out the storm with you.