It’s massive, and it’s complicated. At more than 2,400 pages, theAffordable Care Act(ACA for short) has left businesses and individuals confused about what the law contains and how it affects them. The aim of the law is to provide affordable, quality health care for all Americans. To reach that goal, the law requires large companies to provide health insurance for their employees starting in 2015, and uninsured individuals must get their own health insurance starting in 2014. Those who fail to do so face penalties. Insurance companies must also deal with new requirements. For example, they cannot refuse coverage due to pre-existing conditions, preventive services must be covered with no out-of-pocket costs, young adults can stay on parents’ policies through age 26, and lifetime dollar limits on health benefits are not permitted. The law mandates health insurance coverage, but not every business or individual will be affected by this requirement. Here’s an overview of who will be affected. FOR BUSINESSES – It’s all in the numbers ·Fewer than 50 employees Companies with fewer than 50 employees are encouraged to provide insurance for their employees, but there are no penalties for failing to do so.A special marketplace will be available for businesses with 50 or fewer employees, allowing them to buy health insurance through the Small Business Health Options Program (SHOP). ·Fewer than 25 employees Small companies that pay at least 50% of the health insurance premiums for their employees may be eligible for a tax credit for as much as 35% of the cost of the premiums. To qualify, the business must employ fewer than 25 full-time people with average wages of less than $50,000. For 2014, the maximum credit increases to 50% of the premiums the company pays, though to qualify for the credit, the insurance must be purchased through SHOP. ·50 or more employees For companies with 50 or more full-time employees, the requirement to provide “affordable, minimum essential coverage” to employees has been delayed for one year and is not required until 2015. Originally, employers had been required to file information returns that reported details about the health insurance they provided, with penalties to apply if the insurance did not meet standards. Companies complained that they needed more time to meet the reporting obligations, and in response the IRS made the reporting requirement optional for 2014. Without the reporting, the IRS could not determine penalties, so the penalties also were postponed for a year. Bottom line:the IRS is encouraging companies to comply in 2014 even though there are no penalties for failure to do so. ·The business play or pay penalty Starting in 2015, companies with 50 or more employees that don’t offer minimum essential health insurance face an annual penalty of $2,000 times the number of full-time employees over a 30-employee threshold. If the insurance that is offered is considered unaffordable (it exceeds 9.5% of family income), the company may be assessed a $3,000 per-employee penalty. These penalties apply only if one or more of the company’s employees buy insurance from an exchange and qualify for a federal credit to offset the cost of the premiums. FOR INDIVIDUALS – It’s all about coverage Currently, attention is focused on the health insurance exchanges or “Marketplace” that opened for business on October 1. Confusion about theAffordable Care Acthas left many people thinking everyone has to deal with the exchanges. The fact is that if you are covered by Medicare, Medicaid, or an employer-provided plan, you don’t need to do anything. Also, if you buy your health insurance on your own and are happy with your plan, you can keep your coverage. However, the only way to get any premium-lowering tax credits based on your income is to buy a plan through the Marketplace. ·The exchanges (Marketplace) Each state will either develop an insurance exchange (Marketplace) or use one provided by the federal government. The Marketplace will allow those seeking coverage to comparison shop for health plans from private insurance companies. There will be four types of insurance plans to choose from: Bronze, Silver, Gold, and Platinum. The more expensive the plan, the greater the portion of medical costs that will be covered. The price of each plan will depend on several factors including your age, whether you smoke, and where you live. Many individuals will qualify for federal tax credits which will reduce the premiums they actually pay. Each state’s Marketplace will have a calculator to assist individuals in determining the amount, if any, of their federal tax credit. ·The individual play or pay penalty If you’re one of the 45 million or so Americans without health insurance, you will need to get coverage for 2014 or pay a penalty of $95 or 1% of your income, whichever is greater. Low-income individuals may qualify for subsidies and/or tax credits to help pay the cost of insurance. The penalty increases to $325 or 2% of income for 2015 and to $695 or 2.5% of income for 2016. For 2017 and later years, the penalty is inflation-adjusted. Those who choose not to be insured and to pay the penalty instead will still be liable for 100% of their medical bills. NOTE:If you will be shopping for health insurance on the Marketplace, be aware that there’s no need to rush to enroll; the enrollment period runs from October 1, 2013, through March 31, 2014.Take the time you need to review your options and select what’s best for you and your family.   MORE ABOUT THE LAW AND YOUR TAXES In addition to the penalties required by theAffordable Care Act, the law made other tax changes that could affect you. Among them are the following: ·Annual contributions to flexible spending accounts are limited to $2,500 (indexed for inflation). ·The 7.5% adjusted gross income threshold for deducting unreimbursed medical expenses increases to 10% for those under age 65. Those 65 and older can use the 7.5% threshold through 2016. ·The additional tax on nonqualified distributions from health savings accounts (HSAs) is 20%, an increase from the previous 10% penalty. ·The payroll Medicare tax increases from 1.45% of wages and self-employment income to 2.35% on amounts above $200,000 earned by individuals and above $250,000 earned by married couples filing joint returns. This rate increase applies only to the employee portion, not to the employer portion. ·A 3.8% Medicare surtax is imposed on unearned income (examples: interest, dividends, capital gains) for single taxpayers with income over $200,000 and married couples with income over $250,000. TheAffordable Care Actmay be one of the most complicated and confusing laws ever passed, but one thing is very clear: the law will affect the taxes of most Americans. In order to manage your tax bill, you will have to factor the new health care rules into your overall personal and business tax planning. For guidance, contact our office. To begin checking out your state’s exchange (Marketplace), start at www.healthcare.gov– the federal government’s website on theAffordable Care Act.. ...read more

Financial Records: To Shred or Not to Shred, That is the Question Here’s our attempt to clear the air (or your filing cabinets) on what financial documents to keep and what to toss out. Whether you’re a shredder or a trasher, to follow is a list of important financial documents to keep. KEEPfor 1 year:   Ø Paystubsuntil you receive your W-2 form(s) to ensure it is correct Ø Bank statementsuntil you receive your 1099 form(s) to ensure it is correct Ø Brokerage statementsuntil you receive your annual summary Ø Credit card statementsthat do not have a tax-related expense on them   KEEPindefinitely:   Ø Income tax returnswith proof that you filed and paid it, if applicable Ø Supporting documents that substantiate amounts on your income tax return. This includes, but is not limited to, your W-2 form(s), 1099 form(s), medical receipts, brokerage annual statements, receipts for capital improvements, and other documents that substantiate other amounts on your income tax return Ø Receipts for big ticket purchasesfor as long as you own the item in case of an insurance claim, warranty, or simply because you might return the item TOSS:   Ø ATM receiptsonce you record the transaction in your register Ø Bank deposit slipsonce you see the funds have been deposited into your account Ø Credit card receiptsonce you receive your credit card statement to ensure it is correct. Keep receipts for big ticket purchases though (see above under “KEEPindefinitely”)   GROWING PAINS FOR SMALL BUSINESS  While there are many different types of small businesses, one thing is hugely consistent between them all: growing pains. We’ve cooked up some common areas to focus on so you can face them head on and ensure your small business success.  Monitor your cash flow: ·        Set up a cash reserve account ·        Project monthly revenues and expenses ·        Reconcile bank accounts monthly ·        Collect client payments as soon as possible ·        Pay invoices on the last day they are due ·        Learn how to read financial statements               Review your small business processes Review the processes your small business needs in order to function, whether it’s payroll, tax administration, employee benefits, etc. and make adjustments as necessary to facilitate growth. As your business grows, you may need to outsource for more specialized and professional service.  Time management Clear your daily calendar of clutter that can be easily outsourced or digitized. Also, set aside some quality time with yourself each day to brainstorm creative, new ideas that can ignite even greater business expansion in the future.  Hire talented employees Let’s face it, you can’t run a small business by yourself- you need employees. Remember, however, that your employees are a projection of your business so be sure to hire talented professionals. You might need to hire a recruiter first, depending on your employment needs, but either way, make sure your newbie is a good fit for your small business.  Learn to give up control As your small business starts to grow, you have to think differently- from a multitasking, jack-of-all-trades mindset- to a leader who can see the big-picture. At this point in the growing process, you have to inspire your team to meet and exceed your business’s mission. Let your team do what they were hired to do- remember, you hired talented employees!  The element of change  Last but not least, as your small business grows, there is one constant challenge that you will need to confront: the element of change itself. The best way to make sure the continued growth of your small business is to approach change from a strategic perspective. Addressing these challenges head on will ensure the health and productivity of your growing business for years to come. Clear your calendars for some brainstorming sessions!   SUMMERTIME TAX TIPS Summertime fun can be made even more enjoyable by adding tax savings. Here are some tax-saving ideas to consider: • If you have summer travel plans and the primary purpose of your trip is business, you can deduct all the travel costs to and from your business destination and all other business-related costs even if you add on a few extra days for pleasure. You can’t deduct costs related to the pleasure portion. Including a spouse or friend on your trip is permissible, but you can’t deduct the additional costs for that person. • If you itemize your deductions, you can deduct the mortgage interest and property taxes paid for your vacation home. A boat or RV can qualify as a vacation home if it has sleeping quarters, cooking facilities, and a bathroom. If a retreat also serves as rental property, you can control your tax deductions by changing the number of days you use it for vacation. • If you and your spouse work, the cost of sending your children to a summer day camp may qualify for the child care credit. • If you own a business, consider hiring your child for the summer. Your child can earn up to $6,100 tax-free this year, and your business is entitled to a deduction for the wages paid. You must pay your child a reasonable wage for the work performed. If your business isn’t incorporated, a child under 18 is not subject to FICA taxes.   ...read more

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