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4 posts from January 2013

01/31/2013

W-2 Surprise on Health Care Costs

Doctor figure with patient formThe new 2013 W-2 disclosure requirement of the 2010 health care reform law may surprise some employees.

Employers must now report the amount they pay on their employees’ behalf for health care benefits and the portion, if any, paid by the employee on W-2s. 

This applies if the employer distributes 250 or more W-2s.  Soon, employers with fewer employees may also be disclosing these amounts.

Health benefits are not considered taxable income….yet.  Detailing the costs is a response to the debate about whether such benefits should be taxed.

The Kaiser Family Foundation reports the average annual premium for employer-sponsored health insurance is $5,615 for single coverage and $15,745 for family coverage.  Efforts are underway to attempt to tax part or all of these benefits.

Other statistics from Washington reveal that over the last 5 years, the costs of employer-sponsored health insurance has increased 25% for individual coverage and 30% for family coverage as some employers have offered increases in benefits versus increases in hourly wages.

01/28/2013

Tax-Free IRA Transfers

IRA owners age 70½ or older have just a few more days to make tax-free transfers to eligible charities and have them count for tax-year 2012. Give to Charities

The IRS reports eligible IRA owners have until Thursday, January 31st, to make a direct transfer, or alternatively, if they received IRA distributions during December 2012, to contribute, in cash, part or all of the amounts received to an eligible charity.

The recently approved American Taxpayer Relief Act of 2012 has extended for 2012 and 2013 the provision authorizing qualified charitable distributions (QCDs).  Each year, the IRA owner can exclude from gross income up to $100,000 of these QCDs.  First available in 2006, this provision had expired at the end of 2011, but now has been given two more tax years.

Tax Calendar Squeeze


Calendar with magnifying glassThis tax season, the IRS is delaying until late February or early March issuing a number of forms that affect more complex returns, like those used to claim general business credits, depreciation of property and residential energy credits.

Also, the IRS won’t begin accepting individual tax returns for 1040 filers until January 30th, instead of the originally scheduled date of January 22nd.

All this means refund checks could be delayed about a week and the filing window shrinks from 12 weeks down to 11 weeks.  The filing deadline remains April 15th, which falls on a Monday this tax season.

Click here for more information on forms and dates that may affect you.

01/25/2013

Income Tax Head-Spin Season

All directions arrowsIf your head is spinning from all the new tax law changes, you’re not alone.  Even the IRS’s own National Taxpayer Advocate (yes, there’s a person with that job) has reported to lawmakers that today’s tax code is so complicated it “obscures comprehension”. 

Speaking to members of Congress about her 2012 annual report, Nina Olsen said the tax code is in serious need of revision and described it as an “unconscionable burden” on taxpayers.

Olsen added that the complexity of today’s tax laws requires nearly 60 percent of us to hire professionals to prepare our taxes.  Another 30 percent of taxpayers are opting to purchase tax calculation software for the first time as they prepare their own return.  

Bottom line: The report reveals taxpayers are spending more time preparing their tax returns than ever before and the incidence of errors is increasing dramatically for self-prepared returns.

Nina Olsen reports, “An analysis of IRS data by the Office of the Taxpayer Advocate shows it takes U.S. taxpayers (both individuals and businesses) more than 6.1 billion hours to complete filings required by a tax code that contains almost four million words and that, on average, has more than one new provision added to it daily.”

To make matters worse, although lawmakers have avoided the “fiscal cliff”, tax law updates have added more complexity rather than relief by:

  • creating another income tax bracket
  • providing a new 20% bracket on capital gains and qualified dividends
  • adding new rules limiting personal exemptions
  • allowing for a continued phase-out of itemized deductions

So how does this affect you and what can you do? Think stress relief

If you have a more complex tax return that would, for example, involve mortgage interest, itemized deductions, or a 401K or IRA deduction, or if you own a business, there is an inherent value to hiring a professional to help you navigate the murky tax waters.

When you’re ready, contact McRuer CPAs at 816.741.7882.

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