Health Insurance Penalty

With the press conference this morning from President Obama about the millions who received cancellation notices, President Obama has given the authority to the State Insurance Commissioners to extend coverage for another year.  Now, my family was one that got such letter, and I am hoping that they do extend our insurance, if not we will go uninsured and face the penalty.

So, I thought I would write about the Penalty that is supposed to be in effect on your 2014 Tax Return.

As a Tax Preparer I get a lot of question about the new "Obama Care" penalty and how it is going to effect them.

Here are two of the questions that I have gotten:

1.  What will be my penalty if I don't get Insurance?

2.  I have a child that is 23 and they don't live with me, do I have to provide Insurance for them?

After researching these two questions here are my interpretation of what I read:

1.  According to the Affordable Care Act Chapter 48 "Sec. 5000A. the penalty is $95 per person that does not have insurance over the age of 18.  If you have a dependent under the age of 18 the penalty is one-half of the penalty.  Now the fun part: The other part of the penalty is OR 1% of  the "Household Income" "Modified Gross Income".  Which ever is larger.

Household Income - This is the income of You and your spouse, plus the income of any dependent that is required to file a tax return.

Modified Gross Income - You take the your Adjusted Gross Income (which is the last number on page 1 of your tax return) subtract your Standard or Itemized Deduction add any tax exempt interest.

Adjusted Gross Income - Standard/Itemized Deduction + Tax Exempt Interest = Modified Gross Income

Still with me?

2.  According to "Section 2714 Extension of dependent coverage" -  Group health plan and a health insurance company has to allow you to continue to coverage your adult child (who is not married) until the child turns 26 years of age.

Going back to Chapter 48 "Sec. 5000A. - Family Size is equal to the allowed personal exemptions for that calendar year.

So, the way that I read the Act - if you can't claim them on your Tax Return there is no requirement for you to put them on your plan.

We will see what happens between now and January 2015 if this will change or stay the same.

Sincerely,

Gabe The Taxguy

Payroll and Sales Taxes

If you have employees or sell tangible products i.e.: clothing, food, books, internet sales and many other items. As a business owner you may be required to file tax reports with the IRS, Franchise Tax Board (FTB), and/or the Board of Equalization (BOE).

If you have employees you need to make

sure that your payroll provider (Like Myself) is filing your quarter Tax reports to the IRS and the FTB. 

If you buy materials & supplies that helps produce the product that you sell, you can get a re-sellers permit so you do not have to pay sales tax to that vendor.

If you are selling a tangible product, then you are required to report your sales tax
to the Board of Equalization (BOE) and pay sales tax to them.

Do you sell in the city of El Cajon, La Mesa, Vista or National City in San Diego County? If so, there is an additional form you need to fill out to adjust the extra sales tax.

Give us a call 619 -726-1158 for a quote on your payroll services. We can help you get set up with the IRS, Franchise Tax Board and/or the Board of Equalization (BOE).

Keeping you connected and on top of your business is another piece to the puzzle. We can help you see the bigger picture. 

Importance of staying on top of your Bookkeeping

Are you Self Employed or are you an Independent Contractor?

First, let's answer what an Independent Contractor is....this is anyone who gets paid and their employer doesn't take any taxes out of their check.  Someone who will receive a 1099 at the end of the year.  

If you answered yes to either one, you need to stay on top of your bookkeeping. You may be saying, “What bookkeeping?”  You may be saying, “I don’t have a lot of invoices or bills” or “I am just a small business owner not a large corporation”.  "I'm not a business owner!!"  

You have no idea how often I have heard these words. Well, if you are self employed or get paid without taxes being taken out, then I suggest you do something, so you don't have a big tax liability when it is time to do your tax return. 

By meeting with me on a regular basis, this can help you save money and stay on top of your business. This will allow me to look at your information and see what kind of self employment taxes you may owe, or see how to reinvest back into your business, or yourself to lower that self employment tax. 

Give us a call 619-726-1158 for a free consultation on how we can give you some peace of mind.

Having Peace of Mind is an important piece to your puzzle. Come and talk with me and I can help you find that piece.  

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