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
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
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
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
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.
Payments of the Premium Tax Credit? Remember to Report Changes
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:
increase or decrease in your income
marriage or divorce
birth or adoption of a child
starting a job with health insurance
gaining or losing your eligibility for other health care
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.
Employers Need to Count Employees
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
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.
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