David M.Green Bookkeeping and Tax Service -

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Think you qualify for a hardship exemption for not having health insurance?
Tax Tips for Separated Couples
Exemption from health insurance coverage
Six Tips on Who Should File a 2014 Tax Return
Premium Tax Credit Brings Changes to Your 2014 Income Tax Returns
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Think you qualify for a hardship exemption for not having health insurance?

You can file your tax return before the exemption has been OK’d

IRS says in the Form 8965 instructions the new form for reporting health coverage exemptions. Under the health reform law’s individual mandate, people without health insurance will owe a tax when they file their income tax returns unless they have an exempt...ion.Folks seeking one of the hardship exemptions must submit a multipage application plus any required documentation to the exchange before filing their tax returns. Once they’ve done so, they can enter “pending” in column c of Part 1 of the 8965 and file their 2014 returns while waiting for the exchange to process their application.

Tax Tips for Separated Couples

Ending a marriage puts both partners on a federal tax path requiring forethought and planning to navigate. In addition to decisions about assets and child custody, separated couples have choices that affect how much they pay Uncle Sam. Some of these choices can be made independently; others require you to communicate with each other.

Legal fees

The Internal Revenue Service offers no deductions for court costs and legal fees for a divorce. It does, however, let you deduct any portions of those fees related to tax advice and alimony. These can include expert counsel on how your separation or pending divorce affects all types of taxes, such as income, property and estate, at all levels of taxation. To take advantage of these potential deductions, you need itemized billing statements from your attorney that clearly identify charges for each service billed.

Filing status

December 31 is an important day for separated couples. The IRS considers you married for the entire tax year when you have no separation maintenance decree by the final day of the year. If you are married by IRS standards, you can only choose "married filing jointly" or "married filing separately" status. You cannot file as "single" or "head of household."

Since the IRS honors the divorce laws of the states, where you live affects your options as well. In Texas, for example, you remain married from a tax perspective until your divorce is final, even though you're legally separated.

Joint return considerations

Your filing status affects your tax rate and determines which credits you can claim. Filing jointly can result in a lower tax bill than filing separately, so the IRS recommends calculating your tax liability as single and joint filers to learn which offers the most savings (TurboTax can help with this, and recommend the best filing status for you).

Filing jointly could pose risks, however, since you share responsibility for any taxes due along with related penalties and interest. That means if your estranged spouse skips out on his or her taxes, you’re responsible for paying them.The IRS may relieve you from your partner's tax debts based on information you provide on Form 8857 Request for Innocent Spouse Relief.

Married filing separately

The IRS acknowledges that filing separately leads to paying more taxes but doing so avoids sharing liability for each other's tax obligation. As married filing separately, you have to agree on taking the standard deduction or itemizing -- if one itemizes, you both must itemize. You must limit itemized deductions such as mortgage interest and property taxes to what you paid as individuals, although you can split any medical expenses paid from a joint account. By filing separately, you lose the ability to claim earned income and higher education tax credits among other breaks the IRS offers.

Legally separated filing options

If tax law considers you "unmarried" because you got a decree of separation maintenance prior to December 31, you can file with "single" or "head of household" status.

"Head of household" requires you to have a dependent and pay at least half of the expenses needed to maintain a home. If your dependent is a child who lives with you more than with your spouse, the IRS considers you to be the custodial parent. Your deductions and credits as custodial parent depend on whether your spouse has agreed to waive his ability to claim the child as an exemption under Box 6a on the 1040 form -- only one of you can claim the child as an exemption. When you can claim the dependency exemption, you can claim child-related credits.

Exemption considerations

If you, as custodial parent, agree to let your spouse claim your child as a dependent exemption, you must sign form 8332, Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent. Your noncustodial spouse must attach it to his tax return. Relinquishing this exemption does not affect your ability to file as head of household or take advantage of tax breaks such as the work-related child care expense deduction, as long as you remain the custodial parent.

Exemption from health insurance coverage

If you qualify from a exemption from health insurance coverage you will need to apply for a ECN (Exemption Certificate Number) if you have not applied for a ECN yet please do so as soon as possible.


Six Tips on Who Should File a 2014 Tax Return

Most people file their tax return because they have to, but even if you don’t, there are times when you should. You may be eligible for a tax refund and not know it. This year, there are a few new rules for some who must file. Here are six tax tips to help you find out if you should file a tax return:

1. General Filing Rules. Whether you need to fil...e a tax return depends on a few factors. In most cases, the amount of your income, your filing status and your age determine if you must file a tax return. For example, if you’re single and 28 years old you must file if your income was at least $10,150. Other rules may apply if you’re self-employed or if you’re a dependent of another person. There are also other cases when you must file. Go to IRS.gov/filing to find out if you need to file.

2. New for 2014: Premium Tax Credit. If you bought health insurance through the Health Insurance Marketplace in 2014, you may be eligible for the new Premium Tax Credit. You will need to file a return to claim the credit. If you purchased coverage from the Marketplace in 2014 and chose to have advance payments of the premium tax credit sent directly to your insurer during the year you must file a federal tax return. You will reconcile any advance payments with the allowable Premium Tax Credit. Your Marketplace will provide Form 1095-A, Health Insurance Marketplace Statement, to you by Jan. 31, 2015, containing information that will help you file your tax return.

3. Tax Withheld or Paid. Did your employer withhold federal income tax from your pay? Did you make estimated tax payments? Did you overpay last year and have it applied to this year’s tax? If you answered “yes” to any of these questions, you could be due a refund. But you have to file a tax return to get it.

4. Earned Income Tax Credit. Did you work and earn less than $52,427 last year? You could receive EITC as a tax refund if you qualify with or without a qualifying child. You may be eligible for up to $6,143. Use the 2014 EITC Assistant tool on IRS.gov to find out if you qualify. If you do, file a tax return to claim it.

5. Additional Child Tax Credit. Do you have at least one child that qualifies for the Child Tax Credit? If you don’t get the full credit amount, you may qualify for the Additional Child Tax Credit.

6. American Opportunity Credit. The AOTC is available for four years of post secondary education and can be up to $2,500 per eligible student. You or your dependent must have been a student enrolled at least half time for at least one academic period. Even if you don’t owe any taxes, you still may qualify. However, you must complete Form 8863, Education Credits, and file a return to claim the credit. Use the Interactive Tax Assistant tool on IRS.gov to see if you can claim the credit. Learn more by visiting the IRS’ Education Credits Web page.

Premium Tax Credit Brings Changes to Your 2014 Income Tax Returns

When filing your 2014 federal income tax return, you will see some changes related to the Affordable Care Act. Millions of people who purchased their coverage through a health insurance Marketplace are eligible for premium assistance through the new premium tax credit, which individuals chose to either have paid upfront to their insurers to lower their monthly premiums, or receive when they file their taxes. When you bought your insurance, if you chose to have advance payments of the premium tax credit, the Marketplace estimated the amount based on information you provided about your expected household income and family size for the year.

If you received the benefit of advance credit payments, you must file a federal tax return and reconcile the advance credit payments with the actual premium tax credit you are eligible to claim on your return. You will use IRS Form 8962, Premium Tax Credit (PTC) to make this comparison and to claim the credit. If your advance credit payments are in excess of the amount of the premium tax credit you are eligible for, based on your actual income, you must repay some or all of the excess when you file your return, subject to certain caps.

If you purchased your coverage through the Health Insurance Marketplace, you should receive Form 1095-A, Health Insurance Marketplace Statement from your Marketplace. You should receive this form by early February.

Form 1095-A will provide the information you need to file your taxes, including the name of your insurance company, dates of coverage, amount of monthly insurance premiums for the plan you and other members of your family enrolled in, amount of any advance payments of the premium tax credit for the year, and other information needed need to compute the premium tax credit.

Form 1099-MISC

If you use independent contractors to perform services for your business and you pay them $600 or more for the year, you are required to issue them a Form 1099-MISC after the end of the year to avoid facing the loss of the deduction for their labor and expenses. The 1099s for 2014 must be provided to the independent contractor no later than February 2, 2015 and Form 1096 to the IRS by March 2, 2015.

EMPLOYER REPORTING on Forms 1095-B and 1095-C Under the Affordable Care Act

What is the first date that these forms must be filed?

The forms must be filed for the for the first time early in 2016 for the 2015 calendar year. As with Form W-2, copies of the forms must be provided to individuals by January 31. The forms must be filed with the IRS by February 28 if reporting on paper or by March 31 if reporting electronically.

Who files Form 1095-B?

If your company sponsors an insured plan, the insurance company is required to file Form 1095-B. If your company’s medical coverage is self-insured, the plan sponsor is required to file Form 1095-B. If a plan sponsor of a self-insured plan is also required to file Form 1095-C, the Form 1095-B and Form 1095-C information can be combined onto one Form 1095-C filing.

What does Form 1095-B report?

Form 1095-B reports the name, address and social security number of all individuals (employees, spouses, dependents and others) who are covered under an employer’s medical plan and the number of months during which the individual had at least one day of coverage.

Who files Form 1095-C?

Sponsors of both self-insured plans and insured plans must file Form 1095-C. Even though the first filing date for this form isn’t until January of 2016, employers may want to take steps by the end of 2014 to set up procedures for gathering the necessary data or to contact their payroll service to determine whether the payroll service will have the capability to provide this reporting

What does Form 1095-C report?

An employer filing Form 1095-C generally reports the number of full time employees for each calendar month and lists coverage information for each full time employee. Streamlined reporting methods are available if employers meet certain coverage standards, such as providing coverage to at least 98% of all employees (full time and part time).

Start a Health Savings Account

Tax law gives you a way to save for medical bills on a tax-favored basis through a Health Savings Account. These accounts, which can only be opened by taxpayers who have high-deductible health plans, allow you to sock away up to $3,300 per person ($6,550 per family) to pay future out-of-pocket medical costs. If you’re age 55 or older you can contribute an additional $1,000. In addition to the tax savings today, it’s important to note that you don’t need to spend your HSA savings in a single year, thus the money continues to grow tax-free. If you don’t need the money now, this growing savings or investment account can be tapped to pay medical costs when you’re older.

ACA Hardship Exemptions

There are certain circumstances that affect an individual’s ability to purchase health insurance coverage and which may qualify an individual for a hardship exemption. To make the determination, the Marketplace considers whether an individual has experienced one of the following events:

Becomes homeless
Has been evicted in the past six months, or is facing eviction or foreclosure
Has received a shut-off notice from a utility company
Recently experienced domestic violence
Recently experienced the death of a close family member
Recently experienced a fire, flood, or other natural or human-caused disaster resulting in substantial damage to individual property
Filed for bankruptcy in the last six months
Incurred medical expenses in the last 24 months that resulted in substantial debt
Experienced unexpected increases in necessary expenses due to caring for an ill, disabled, or aging family member
Expects to claim a child as a tax dependent who has been denied coverage in Medicaid and CHIP, and another person is required by court order to give medical support to the child. In this case, the individual would not have to make a payment for the child
As a result of an eligibility appeals decision, is determined eligible for enrollment in a QHP through a Marketplace, the premium tax credit, or cost-sharing reductions for a period of time during which he or she was not enrolled in a QHP through a Marketplace
Was determined ineligible for Medicaid because his or her state did not expand eligibility for Medicaid under the Affordable Care Act
Lost insurance coverage because his or her individual plan was cancelled and believes other available coverage options are unaffordable
Experiences another hardship in obtaining health insurance

Form 8922, Third-Party Sick Pay

Beginning with tax year 2014 (processing year 2015) taxpayers will file 2014 Form 8922 with IRS. For tax year 2014 a paper Form 8922 is required. This form replaces the Third-Party Sick Pay Recaps that were filed on Form W-2 and Form W-3 with the Social Security Administration. The reporting of third-party sick pay recaps to the SSA ends after tax year 2013. Other reporting requirements for third party sick pay remain unchanged.

The purpose of filing Form 8922 is to reconcile employment tax returns (for example, Form 941) with Forms W-2 when third-party sick pay is paid by a party other than the employer and when the liability for Federal Insurance Contributions Act (FICA) taxes is split between the third party and the employer for which services are normally performed.