Category: Taxes
-
Reviewing income tax returns for accuracy and opportunity
Reviewing income tax returns for accuracy is valuable because it can avoid processing delays, prevent errors that would cause audits and trigger penalties. There is a second potentially more valuable reason to review a tax return. and uncover opportunities for tax planning to reduce tax burdens in the future. Many accountants, including myself, offer a…
-
How to change the tax reporting of employer health insurance payments
There is a ‘wrong way’ and a ‘right way’ to report a change in employee health insurance payments to avoid payroll tax liability problems Case 1: The wrong way to change employer reporting of health insurance Tom works for ABC Inc. at a salary of $50,000. ABC has no health insurance plan but agreed to reimburse…
-
Employer health insurance payments are not wages
Employer-paid health insurance may not be included in employee wages. Doing so, even in error, does not alleviate the employer from possible excise taxes under ACA. This errant accounting practice also creates additional employer tax penalty liabilities for improper reporting of wages. This afternoon I attended a continuing professional education webinar where a fabulous tax expert…
-
Explaining the Health Insurance Penalty
Accountants and tax preparers complain that they have been put in the position of enforcing the Affordable Care Act’s insurance mandate without compensation or training as health insurance agents. They are absolutely correct and this system has produced in some bizarre results. This was illustrated when one accountant wrote to me “I have clients that…
-
The true cost of tax preparation software
My credit union ran an advertisement for TurboTax software offering a discount of “up to $20” on the purchase price of the more expensive versions. Yet most people know that the cost of software is only a small portion of the total cost for people who choose to file their taxes using this approach. Intuit,…
-
Do I need to file a 2015 federal income tax return?
This is a simple question but much like the rest of our tax law, the answer is complicated. In addition, you may likely want to file a tax return in a number of circumstances even if you are not required to do so. Kelly Erb does a great job in explaining this topic in Forbes and…
-
Personal principles of tax preparation work
I have these four personal beliefs or principles that guide my tax preparation work. Publishing these as “beliefs” here does not mean that they reflect current realities in the industry. Tax preparation fees should be bench-marked in some manner simply because tax filing assistance is a service stemming from a government requirement that affects virtually everybody. Tax preparation…
-
Self-prepared tax data hack shows risk in personal devices
The nation’s 3rd largest submitter of self-prepared income tax returns reports that data thieves stole customers’ financial information. The interesting part of this story is that the company, TaxAct, says the thieves stole the username and password data elsewhere (for example, hacking individual cell phones) and then used those legitimate log in credentials to gain…
-
How to deal with an IRS penalty
The IRS issues about 50 million taxpayer penalties each year to the pool of about 100 million taxpayers who file returns. That would 1 out of every 2 filers if the penalties were evenly distributed! In reality, multiple penalties are bundled together and assessed against fewer taxpayers. Yet the number of automated tax penalty assessments for…