IRS releases draft instructions for ACA reporting forms

Originally posted August 29, 2014 by Andrea Davis on http://ebn.benefitnews.com

Forms 1094-B and 1095-B are used by organizations that are not reporting to the IRS as large employers – insurers and sponsors of multiemployer plans, for example. Forms 1094-C and 1095-C, meanwhile, are used by organizations that are subject to the employer mandate.

“The instructions are voluminous and reflect the complexity behind the information, particularly that employers are going to have to provide,” says Amy Bergner, managing director, human resource solutions at PricewaterhouseCoopers in Washington, DC.

The IRS released the draft forms a few weeks ago but without draft instructions, “it was difficult to tell exactly what employers and insurers were going to have to do,” she notes. “Now we have these draft instructions that really walk through what’s behind all of the reporting.

Bergner says employers should review the draft instructions as soon as possible with all third-party providers who help them with tax reporting. “Even though these reports are not filed with the IRS or sent to employees until early in 2016, employers have to be capturing the information on a monthly basis starting in January 2015,” she says.

The purpose of the forms is three-fold:

1. When individuals file their individual tax returns, they’re going to have to report whether or not they have health insurance as required by the ACA’s individual mandate. The IRS can compare what the individual is reporting with what the employer is reporting.

2. The IRS can double check whether people who have received federal government subsidies to buy insurance on the exchanges were actually entitled to it. People who are offered employer-sponsored coverage are not entitled to the subsidy.

3. The IRS can enforce the employer mandate, which requires employers with 50 or more full-time employees to offer health insurance.

“The instructions include many of the complicated and detailed rules about the employer mandate, details usually reserved for regulations or other technical guidance,” says Bergner. “We expect that many employers and insurers will need assistance decoding the instructions and the underlying rules to be able to ultimately provide timely and accurate reports.”


More Americans Spending Rather than Saving Tax Refund

Original article http://ebn.benefitnews.com

By Margarida Correia

Most Americans (85%) will receive a federal tax refund averaging $2,803. What will spendthrift Americans do with the money? More than twice as many will spend rather than save it, according to Capital One Bank’s annual taxes and savings survey.

More than a third (35%) plan to spend all or part of the refund, while only 16% will save it. Nearly a quarter (22%) will use the refund to pay down debt and 4% will invest their returns.

Of those who plan to spend all or part of their refund this year, 23% will spend it on vacation. One in three will spend it on everyday expenses and necessities with the rest spending it on various items, including clothing and accessories (16%), iPads, smartphones and other electronics (15%), and major purchases (16%).

Less than half (42%) were aware that that their take-home pay would decline this year due to the recent elimination of the payroll tax holiday by Congress. The awareness was greater among men, with 47% saying they were very aware of the decline in take-home pay, compared with 38% for women.

“At a time when people are seeing smaller paychecks, now more than ever they should take a step back, evaluate their financial goals and consider saving their tax refund,” says Mickey Konson, managing vice president for Retail Banking at Capital One Bank.

The telephone survey polled 1,006 U.S. adults age 18 and over.

Margarida Correia is Associate Editor for Bank Investment Consultant, a SourceMedia publication.


Think Anyone Can Prepare Your Tax Return? Think Again!

by Source Blogger

The United States has a complex tax system. Some politicians have even declared that a “flat tax” would work in maintaining a consistent, marginal tax.

In the meantime, it is up to us to do our own taxes. Taxes to me, is another service that is provided that you can probably do yourself. Most tax preparers have software where they can submit the same, simple information you can enter into tax preparation platforms like Turbo Tax or Tax Act  on your own.

Over the last decade, more and more individuals have been either doing their own taxes or having a friend do them (In 2010, professional tax preparers handled only about 60% of those returns)…. and staying away from all the price gouging that companies like HR Block and Jackson Hewitt impose, particularly if you are in financial need and require a rapid return. (Note: as of last year, Rapid Refunds were restricted by federal regulators at HR Block and capped at $1500 for Jackson Hewitt.)

My wife, who is not a certified tax professional, often does the tax returns for about 10-15 of her co-workers and various family members. Does this appear to be the trend now?

While the Mrs. seems to be doing a good job, what are some red flags you should look for when a tax preparer is referred to you? Just because they appear confident and ready to earn your business, should you let them?

5 Red Flags To Look For: Think Anyone Can Prepare Your Taxes? Think Again!

1) Lack Of Availability/Lack Of Integrity — Giving one access to your financial documents and exposing intimate details about your life, family, income, expenses, and deductions is not something you should take lightly. Take some time to meet this person in person and learn about them. You want to know about their background, experience… plus, you want to know what level of support you can expect if something goes wrong now… and 5 years from now!

If I’ve given documents to my tax preparer, I expect, he/she will have questions, need more clarification, or may even request supporting documentation. When that’s not the case, and when the preparer is anxious to rush to a filing, I’d worry!

Another concern is when the tax preparer wants to remain anonymous and your friend who recommended them wants to pick up your W-2′s and deliver them on your behalf.

Also, be weary if someone who works at a tax firm is scraping work on the side for their own benefit  and either misrepresenting their company or misrepresenting what their role is.

2) Big Promises — The reality is many Americans actually end up owing money. If you haven’t evaluated my financial situation, how can you promise… anything?

This type of approach is insulting and a ploy to take advantage of people’s unfortunate naivety.

Sure, anyone can promise a BIG refund if they grossly manipulate the numbers, but the IRS will surely target these miscalculations and audit you!

3) Credentials — Oh, they don’t have any? May I have some references? I want to speak with clients you have worked with in the past.

You can avoid potentially serious issues by checking if your tax preparer has the correct identification. The IRS recently began assigning Preparer Tax Identification Numbers (PTINs), and if your tax specialist can’t provide one, you may be courting trouble by using an unlicensed preparer.

4) My Refund Is In YOUR Checking Account?  — If a tax preparer insists that any refund check be made out to his or her company, or deposited directly into a bank account without your name on it, that’s a huge red flag that your refund may not find you when all is said and done.

5) Your Fee Is What Percentage Of My Return? — Reputable tax-prep firms charge a flat fee for their services, based on the size and scope of your tax return. If a preparer bases your fee on a percentage of your tax refund, that should be an immediate deal-breaker. That gives the preparer incentive to pump up your refund by any means possible, which can invite some mishandling of your financial information.

Bottom Line 

Just because someone has done something for a long time, does not mean they do it well.

In the end,  including claiming too many exemptions, failing to claim allowable tax credits and missing tax deductions that could have saved you money is YOUR responsibility. Your good name on the line (literally), it’s best to thoroughly review any tax specialist you’re thinking of bringing aboard.

People take a lot for granted when they are buying a home, a car, giving their money to a Financial Adviser, or getting their taxes done. Don’t be that person.

Source Blogger says: Be Careful!