Ray Clark, CPA, MBA | Clark & Clark PC | 203 East 800 South | Salt Lake City, UT 84111 | 801-521-4538 | staff@clarkaccountingcpa.com

       

 


 

 

 


 

 

 

Plan Now for Next Year's Taxes + Report Changes in Circumstances + Why Employers Count Employees


 

Now is a Good Time to Plan for Next Year's Taxes
 

You may be tempted to forget about your taxes once you've filed but some tax planning done now may benefit you later.

 

Now is a good time to set up a system so you can keep your tax records safe and easy to find. Here are some IRS tips to give you a leg up on next year's taxes:

- Take action when life changes occur. Some life events can change the amount of tax you owe. Examples include a change in marital status or the birth of a child. When these happen, you may need to change the amount of tax withheld from your pay. To do that, file a new Form W-4, Employee's Withholding Allowance Certificate, with your employer. Use the IRS Withholding Calculator tool on IRS.gov to help you fill out the form.
 

- Report changes in circumstances to the Health Insurance Marketplace. If you enroll in insurance coverage through the Health Insurance Marketplace for 2016 coverage, you should report changes in circumstances to the Marketplace when they happen. Report events such as changes in your income or family size. Doing so will help you avoid getting too much or too little financial assistance.
 

- Keep records safe. Print and keep a copy of your 2015 tax return and supporting records together in a safe place. This includes W-2 Forms, Forms 1099, bank records and records of your family's health care insurance coverage. If you ever need your tax return or records, it will be easier for you to get them. For example, you may need a copy of your tax return if you apply for a home loan or financial aid for college. You should use your tax return as a guide when you do your taxes next year.
 

- Stay organized. Make tax time easier. Have your family put tax records in the same place during the year. That way you won't have to search for misplaced records when you file next year.
 
- Think about itemizing. You may be able to lower your taxes if you itemize deductions instead of taking the standard deduction. Owning a home, paying medical expenses and qualified donations to charity could mean more tax savings. See the instructions for Schedule A, Itemized Deductions, for a list of deductions.
 

- Stay informed. Subscribe to IRS Tax Tips to get emails about tax law changes, how to save money and much more. You can also get Tax Tips on IRS.gov or IRS2Go, the IRS mobile app. You'll receive Tips each weekday in the tax filing season and three days a week in summer. You will also get Special Edition Tax Tips at other times during the year.

Each and every taxpayer has a set of fundamental rights they should be aware of when dealing with the IRS. These are your Taxpayer Bill of Rights. Explore your rights and our obligations to protect them on IRS.gov.
 



Getting Advance Payments of the Premium Tax Credit? Remember to Report Changes in Circumstances

If you purchased 2016 health care coverage through the Health Insurance Marketplace, you may have chosen to have advance payments of the premium tax credit paid to your insurance company to lower your monthly premiums.

 

If this is the case, it's important to let your Marketplace know about significant life events, known as changes in circumstances.

These changes such as those to your income or family size may affect your premium tax credit. Reporting the changes will help you avoid getting too much or too little advance payment of the premium tax credit. Getting too little could mean missing out on premium assistance to reduce your monthly premiums. Getting too much means you may owe additional money or get a smaller refund when you file your taxes.

If your income for the year turns out to be too high to receive the premium tax credit, you will have to repay all of the payments that were made on your behalf, with no limitation. Changes in circumstances that you should report to the Marketplace include:

- an increase or decrease in your income
- marriage or divorce
- the birth or adoption of a child
- starting a job with health insurance
- gaining or losing your eligibility for other health care coverage
- changing your residence

Changes in circumstances may qualify you for a special enrollment period to change or get insurance through the Marketplace. In most cases, if you qualify for the special enrollment period, you will have sixty days to enroll following the change in circumstances. You can find Information about special enrollment at HealthCare.gov.

The Premium Tax Credit Change Estimator can help you estimate how your premium tax credit will change if your income or family size changes during the year. This estimator tool does not report changes in circumstances to your Marketplace. To report changes and to adjust the amount of your advance payments of the premium tax credit you must contact your Health Insurance Marketplace.

Find out more about the premium tax credit and other tax-related provisions of the health care law at IRS.gov/aca.
 



Why Employers Need to Count Employees

It's important to know how many full-time employees you have because two provisions of the Affordable Care Act employer shared responsibility and employer information reporting for offers of minimum essential coverage apply only to applicable large employers.

Employers average the number of their full-time employees, including full-time equivalents, for the months from the previous year to see whether they are considered an applicable large employer.

Whether your organization is an ALE for a particular calendar year depends on the size of your workforce in the preceding calendar year. To be an ALE, you must have had an average of at least 50 full-time employees including full-time-equivalent employees during the preceding calendar year. So, for example, you will use information about the size of your workforce during 2016 to determine if your organization is an ALE for 2017.

In general:

- A full-time employee is an employee who is employed on average, per month, at least 30 hours of service per week, or at least 130 hours of service in a calendar month.

- A full-time equivalent employee is a combination of employees, each of whom individually is not a full-time employee, but who, in combination, are equivalent to a full-time employee.

- An aggregated group is commonly owned or otherwise related or affiliated employers, which must combine their employees to determine their workforce size.


There are many additional rules on determining who is a full-time employee, including what counts as hours of service.

For more information, see the Information Reporting by Applicable Large Employers and the Employer Shared Responsibility Provisions pages on IRS.gov/aca.

 

If you have comments or questions on the information in these articles, as usual feel free to call our offices at 801-521-4538.

 

Ray Clark, CPA, MBA

 


Ray Clark, CPA, MBA | Clark & Clark PC | 203 East 800 South | Salt Lake City, UT 84111 | 801-521-4538 | staff@clarkaccountingcpa.com

 

www.clarkaccountingcpa.net

 Connect With Me on Linkedin

 

 

 

 

 

 

CONFIDENTIALITY NOTICE: The information contained in this electronic mail message is legally privileged and confidential information intended only for the use of the individual or entity named above. If the reader of this message is not the intended recipient, you are hereby notified that any dissemination, distribution or copy of this electronic message is strictly prohibited. If you have received this electronic mail message in error, please immediately notify this office, return the original message to us at the above email address, and delete the message from your computer. Thank you.

 

IRS CIRCULAR 230 DISCLOSURE: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.