New Penalties for inadequate healthcare insurance begin on the 2014 Federal income tax returns.

Don’t be deceived by the $95 figure for the penalty for not having health insurance, it only applies to those earning less than $28,500.   The ACA, Affordable Care Act, penalty will equal 1% of earnings for those making over $28,500 and more than double in 2015.  For example if you made $50,000, the penalty will equal $500 for 2014 and double to 2% in 2015 or $1,000.  Penalties will rise again for the last time in 2016 to 2.5% for those earning more than $83,400.  See below for details:

2014 – If earnings are less than $28,500

  Adult – $95         Child – $47.50    Total up to $285 per family

 Or 1% of income if earnings are greater than $28,500 (no cap)

 

2015 – If earnings are less than $48,750

  Adult – $325       Child – $162.50  Total up to $975 per family

 Or 2% of income if earnings are greater than $48,750 (no cap)

 

2016 – If earnings are less than $83,400

  Adult – $695       Child – $347.50  Total up to $2,085 per family

 Or 2.5% of income if earnings are greater than $83,400 (no cap)

 

PARR & ASSOCIATES passes on Cloud virtual storage.

We believe any virtual storage security system can be breached so here at Parr & Associates we avoid public storage options completely.  Returns are delivered or picked up through hard copies and we encourage all sensitive data to be faxed, mailed or hand delivered for added security.

IRS Reminds Taxpayers Deferred Income from Roth IRA Conversions made in 2010 Must be Reported on their 2012 return.

In most cases, taxpayers who converted amounts to a Roth IRA or designated Roth account in 2010 must report half of the resulting taxable income on their 2012 returns, the IRS said.

Normally, Roth conversions are taxable in the year the conversion occurs. For example, the taxable amount from a 2012 conversion must be included in full on a 2012 return. But under a special rule that applied only to 2010 conversions, taxpayers generally include half the taxable amount in their income for 2011 and half for 2012, unless they chose to include all of it in income on their 2010 return.

Charitable Deductions possible until Feb 1st from IRAs

Charitable contributions for 2012 can still be made in January of 2013 if they are made directly from an IRA or from a post Nov 30, 2012 IRA cash distribution for those over 70 ½ currently receiving IRA distributions. This special type of contribution with IRA funds can be made until February 1, 2013 for a charitable deduction on your 2012 tax return.

IRS Delays Individual Filings until End of January

With the late passage of ATRA, the new tax legislation or the American Taxpayer Relief Act, the IRS said Tuesday that it plans to open the 2013 tax filing season on Jan. 30, more than a week after the initially planned start date of Jan. 22. Some returns cannot be processed until late February or March for anyone claiming residential energy credits, depreciation of property or general business credits. The IRS successfully opened it’s new eFile system to accept business returns Monday Jan 7th.

Fiscal Cliff News: Vote on Bill to extend tax cuts attempted in House

House Minority Leader Nancy Pelosi, D-Calif., said she would try to use a procedure known as a discharge petition to bring a Senate-passed bill for extending the middle-class tax cuts to the floor of the House tomorrow, Tuesday December 4th.

A discharge petition would require 218 signatures (Democrats hold only 192 seats) to bring it to the floor of the House. Republicans, who hold a majority in the House, have so far resisted allowing a vote on a bill passed earlier this year by the Senate, which would extend the tax cuts for only those earning less than $250,000 a year.

House Speaker John Boehner, R-Ohio, said on Fox News Sunday that President Obama’s latest proposal , presented by Treasury Secretary Timothy Geithner, to avert the fiscal cliff was a “non-serious proposal.”

Geithner, however, said he believes a compromise on the fiscal cliff talks can be reached. “I think we’re going to get there,” he said. However, he insisted that Republicans need to come up with a counter-offer. “We need to know what they’re prepared to do on [tax] rates and revenues, and we need to know what they’re prepared to do on the spending side”.

 

IRS Increases Mileage Rates a Penny in 2013

Beginning on Jan. 1, 2013, the standard mileage rates for the use of a car, as well as vans, pickups and panel trucks, will be raised 1 cent from 2012 rates:   56.5 cents per mile for business miles driven, 24 cents per mile driven for medical or moving purposes, and 14 cents per mile driven in service of charitable organizations.  The medical and moving rate is also up 1 cent per mile from the 2012 rate.