The Blog Of TL Wall Accounting

Archive for March, 2015

Have You Purchased Health Care Coverage Yet?

There are more than 11 million people who have signed up for insurance through the government’s health exchange, also known as the Affordable Care Act. At this point in time more people have insurance coverage than ever before in the history of this country.

For those that don’t have coverage though, time is about to run out. We did a post on things to know about the ACA last year. What we didn’t cover in that article is the time frame that you need to have insurance coverage so you can avoid the penalty.

Basically, the law says that if you’re not covered for more than 3 consecutive months, you might have to pay a penalty. Last year it was 2 months, but they gave you until May to sign up for insurance coverage. You’re totally exempt if your income is below your tax filing threshold or if you were denied Medicaid coverage. You’re also exempt if coverage would cost more than 8% per person in your household.

Unfortunately, the open enrollment period is now over, but there is a special enrollment period that lasts through the end of April if you qualify for it. If you just forgot or had problems filling out the paperwork, it can’t hurt to check this out.

By the way, you need to remember that the penalties are added to your income, not how much you actually have to pay. As an example, if your income was $30,000 and you got hit with a 2% family penalty, it would mean your total tax would be based on $30,600. Maybe… because the penalty is the “greater” fee between 2% or $325 per adult and $162.50 per child. At least the maximum for a family is only $925.

Still, it’s always better to have insurance if you can afford it. Even with the high deductible plans, you’ll find that you’ll get some discounts on medical services that will help reduce your out of pocket costs. True, it’s a monthly bill that might cost you between $350 and $500 (depending on your state), but if you have kids it could save you money in the long run (and you might qualify for a discount if you have problems paying the premium based on your income). It’s at least worth exploring.

Anxiety At Tax Time

I don’t know many people who don’t get some kind of anxiety at tax time. Whether you think you have money coming back to you or whether you think (or know), you’re going to owe money, it’s a tough time of the year when you know it’s filing time.

Did you know it’s estimated that around 8 million people a year don’t file their taxes, either on time or at all? That’s a fantastic figure, and it’s estimated to cost the government $83 billion a year. Think about it; this includes people who are getting money back.

Why don’t people do their taxes? The figure isn’t all that high for those who don’t believe in the tax system, the ones who believe the government doesn’t have the right to tax them.

The top two things are people just forget about it and people are scared because they feel they’re going to owe and won’t have the money to pay for it. Since both of these are common but only one of them is something we can help you with, we’re going to talk about the second issue.

Here’s a dose of reality for you; it’s always better to know. Even if you think you owe, you need to know what it is because that’s the only way you can possibly do something about it. As we wrote 2 years ago, the IRS will work with you to help you pay back your taxes. Depending on how much you owe, you could end up paying them as little as $25 a month if that’s all you can afford. It always depends on your circumstances, but they’re willing to work with you.

Going to an accountant for tax help might be better than going to a tax service. One of our client’s wives was told that she owed almost $4,500 in taxes because she’d worked a part time job that didn’t take much in taxes out. By coming to us, we were able to combine her and her husband’s taxes (they’d filed separately because he worked independently) they were able to bring the combined liability down to under $500.

It’s not that accountants are doing sneaky things to keep their clients from paying their taxes. It’s that they know some things even tax preparers might not know. Often tax preparers are temporary workers who go through a class, pass a test and man a table during tax season. It’s hard to compare that to someone who’s literally doing tax work all year long.

Don’t sit home scared of finding out if you’re going to owe something to the IRS or not. Go see a professional and take a major step forward in controlling your life.