Marsha Weisse, CPA

02/15/2024

NRA's lightning-rod spokeswoman ranted and hollered, but mostly she said a bunch of things that just aren't true

08/02/2016

Signing up for Square is fast and free with no commitments or long-term contracts.

03/16/2016

First question: Will they owe you a refund,
OR will you owe them money?

If THEY owe YOU a Refund…

Don’t sweat it. They don’t mind refunding your over-
paid taxes a little bit late. Or even a lot late. It’s your
money, and they’re not paying you any interest on it,
so they’re not in a rush for you to reclaim your money.

So far this tax year, 78% of all tax filers have received
refunds that averaged more than $2,800.

That having been said, if you aren’t going to be ready
by 4/15, go ahead and file a Form 4868 (“Application
for Automatic Extension of Time To File U.S. Individual
Income Tax Return”). That’s because since you will be
getting a refund, they won’t hassle you about not filing
your return “on time.”

Filing a Form 4868 automatically resets your tax-filing
deadline to October 15, 2016. The only downside is
that you will be waiting longer to get back your over-
paid taxes – otherwise called a Refund.

BUT, if YOU owe THEM more taxes…

…the rules change. An “extension of time time file”
(Form 4868) is NOT an ““extension of time to pay”
any taxes you owe.

If you expect to owe money, you should include
payment for that amount with your Form 4868. If
you file for a six month extension, and make your
payment on time (by April 15), you can avoid both
late-filing penalties and late-payment penalties.

BUT WHAT IF YOU CAN’T PAY
ALL THAT YOU OWE?

Pay as much of it as you can by Apr. 15. If you
have a serious financial hardship, look into filing
Form 1127, “Application for Extension of Time
to PAY Taxes Due.”

By agreeing to monthly installment payments, you
can often get up to 72 months to pay the full amount.
And the interest won’t kill you either. It is currently
only about 3% per year, compounded daily, and the
late-payment penalty is one-half percent per month.

01/11/2016

Important Obamacare Information:

When applying for insurance through a state or the federal health insurance marketplace, you will be asked to provide an estimate of your household income for 2016. Your household income is a key factor in determining if you are qualified for an insurance subsidy called the premium tax credit (PTC). Any premium tax credit that you are entitled to will be computed on your 2016 tax return when it is filed in 2017. However, the insurance marketplace will allow you to reduce your insurance premiums during the year by applying this credit in advance based upon the estimate of your household income you provided when applying for the insurance. This advance is referred to as the advanced premium tax credit (APTC).

It is very important to remember that the PTC is based on the actual family income when your tax return is filed in 2017—not on the estimate you provided when you enrolled—and if the APTC you received during 2016 was more than the PTC you are entitled to based upon your household income, you may be required to repay all or part of the APTC you received during 2016. Thus, it is important to correctly estimate your family’s household income when applying for the insurance and to report any significant income changes during the year on the insurance marketplace.

Household income includes the modified adjusted gross income (MAGI) of everyone in your family who is required to file a tax return. Your family includes you, your spouse, and everyone you are entitled to claim as a dependent on your tax return. MAGI is your family’s adjusted gross income (AGI) plus nontaxable social security, nontaxable interest and excluded foreign earned income.

As an example, say that you are married with one child. You have a W-2 income of $35,000 and nontaxable interest income of $150. Your spouse does not work, but your 16-year-old child works at a fast food restaurant and has a W-2 income of $4,000 for the year. Your AGI would be $35,000, which includes only your W-2 income. However, your MAGI would be $35,150 because it includes the nontaxable interest income. Since your child’s W-2 income is less than $6,300 (the standard deduction for 2016), your child is not required to file a tax return, and your child’s income (MAGI) is not included in the household income. Thus, your household income would be $35,150.

However, if your child’s W-2 income had been $7,000 (exceeding the standard deduction for the year), the child would have to file a tax return, and the child’s income would have to be included when determining your household income, which in this case would be $42,150 ($35,150 + $7,000). The addition of the child’s income to the household will significantly reduce the amount of PTC you are entitled to, and not including it when estimating your income will most likely result in you having to repay a significant amount of APTC on your 2016 tax return.

The computation of household income can become complicated when dependent children are working and when one or more forms of nontaxable income are received by a family member. It may be appropriate to consult with this office for assistance when determining household income.

12/19/2015

For the past few years, year-end tax planning has been challenging due to the lateness of action by Congress. This year is no different because of uncertainty over whether Congress will extend any of the many expired or expiring tax provisions. However, regardless of what Congress does later this year, solid tax savings can still be realized by taking advantage of tax breaks that are still on the books for 2015. For individuals and small businesses, these include:
Capital Gains and Losses – You can employ several strategies to suit your particular tax circumstances. If your income is low this year and your tax bracket is 15% or lower, you can take advantage of the zero percent capital gains bracket benefit, resulting in no tax for part or all of your long-term gains. Others, affected by the market downturn earlier this year, should review their portfolio with an eye to offsetting gains with losses and take advantage of the $3,000 ($1,500 for married taxpayers filing separately) allowable annual capital loss allowance. Any losses in excess of those amounts are carried forward to future years.

Roth IRA Conversions – If your income is unusually low this year, you may wish to consider converting your traditional IRA into a Roth IRA. Even if your income is at your normal level, with the recent decline in the stock markets, the current value of your Traditional IRA may be low, which provides you an opportunity to convert it into a Roth IRA at a lower tax amount. Thereafter, future increases in value would be tax-free when you retire.

Recharacterizing a Roth Conversion – If you converted assets in a traditional IRA to a Roth IRA earlier in the year, the value of those assets may have declined due to this summer's market drop; and, as a result, you will end up paying more taxes than necessary on the higher conversion-date valuation. However, you may undo that conversion by recharacterizing it, which is accomplished by transferring the converted amount (plus earnings, or minus losses) from the Roth IRA back to a traditional IRA. This must be done via a trustee-to-trustee transfer. You can later (generally after 30 days) reconvert to a Roth IRA.

Don't Forget Your Minimum Required Distribution – If you have reached age 70 1/2, you must make required minimum distributions (RMDs) from your IRA, 401(k) plan and other employer-sponsored retirement plans. Failure to take a required withdrawal can result in a penalty of 50% of the amount of the RMD not withdrawn.

Take Advantage of the Annual Gift Tax Exemption – Although gifts do not currently provide a tax deduction, you can give up to $14,000 in 2015 to each of an unlimited number of individuals without incurring any gift tax. There's no carryover from this year to next year of unused exemptions.

Expensing Allowance (Sec 179 Deduction) – Businesses should consider making expenditures that qualify for the business property expensing option. For tax years beginning in 2015, the expensing limit is $25,000. That means that businesses that make timely purchases will be able to currently deduct most, if not all, of the outlays for machinery and equipment. Note: There is a good chance the Congress will increase that limit before year's end and after this newsletter has gone to press, so watch for further developments.

Self-employed Retirement Plans – If you are self-employed and haven't done so yet, you may wish to establish a self-employed retirement plan. Certain types of plans must be established before the end of the year to make you eligible to deduct contributions made to the plan for 2015, even if the contributions aren't made until 2016. You may also qualify for the pension start-up credit.

Increase Basis – If you own an interest in a partnership or S corporation that is going to show a loss in 2015, you may want to increase your investment in the entity so you can deduct the loss, which is limited to your basis in the entity.
Also keep in mind when considering year-end tax strategies that many of the tax breaks allowed for calculating regular taxes are disallowed for alternative minimum tax (AMT) purposes. These include deduction for property taxes on your residence, state income taxes, miscellaneous itemized deductions, and personal exemption deductions. Other deductions, such as for mortgage interest, are calculated in a more restrictive way for AMT purposes than for regular tax purposes. As a result, accelerating payment of these expenses that would normally be made in early 2016 to 2015 should – in some cases – not be done.

12/17/2015

Make it a Christmas to remember… without going into debt! Here are seven ways to save: http://bit.ly/1ORwtTL

Dinners, parties and gifts … oh my! The holiday season is upon us and that means for most, spending will be at an all-time high. While some may have saved throughout the year for this special season of giving, many will break out their credit cards and dig themselves into debt. But it doesn’t have t…

11/19/2015

11/11/2015

Happy Veterans Day! To all who have and continue to serve. We are forever indebted to you. Thank You!

11/08/2015

Retirement Plan Distribution Pitfalls

When an individual retires or leaves an employer's service, the individual will be required to take a distribution from the employer's retirement plan (if the employer had a plan). Depending on the employee's age and the plan's terms, a distribution may not be required immediately, but when it's time to take the distribution there are a number of tax pitfalls that can create some very big tax headaches for the employee. This article will explore those hazards and discuss how to avoid them.

First and foremost, if the employee does not transfer or roll the distribution over into another employer's qualified plan or an IRA, the entire taxable amount of the distribution will be included in the employee's taxed income for the year of the distribution. In addition, if the employee is under 59-1/2 years of age at the time of the distribution, the employee may also be subject to a 10% early withdrawal penalty on the taxable portion of the distribution.

There is also a major distinction between rolling over the distribution and having it directly transferred to another qualified plan or IRA account. A rollover is when the individual actually takes possession of the funds and then, within the statutory 60-day limit, deposits the funds into another qualified plan or IRA. As the name implies, a direct transfer is when the administrator (trustee) of the employer's plan transfers the funds directly to another qualified plan or an IRA in a trustee-to-trustee transfer for the departing employee.

Taking possession of the funds and subsequently rolling them over to another plan exposes the employee to a couple of substantial hazards. The first potential problem occurs when the employee fails to get the funds deposited into a new plan within the 60-day limit. In that case, the entire distribution will be taxable (except for the amount equal to the employee's after-tax contributions, if any) and the taxable amount may also be subject to the 10% early distribution penalty. The second hazard occurs because the employer is required by law to withhold 20% of the distribution for federal income taxes. Thus, when it comes time to roll the funds into another plan, the employee only has 80% of the funds needed to complete a tax-free rollover. If the employee does not have other funds to make up for the 20% withheld, 20% of the distribution will become taxable. Of course, the amount that was withheld is claimed as federal income tax withholding when the employee files his tax return for the year. However, depending on the employee's overall taxable income and tax bracket, the amount withheld from the retirement distribution may not be sufficient to cover all the tax liability on the non-rolled distribution, especially if the 10% penalty also applies. On the other hand, when funds from the retirement plan are transferred trustee-to-trustee to another qualified plan or IRA, there is no withholding requirement, the employer can transfer the entire amount to the new plan, and the employee pays no tax on the transferred amount until it is withdrawn at some later date.

Pulling money from a retirement plan prior to retirement is never a good financial or tax move. Sometimes, however, a current financial need will make it necessary. The distribution will always be taxable (or partly taxable if the employee made post-tax contributions to the plan), but there are exceptions that may allow you to avoid all or part of the penalty. Please call for further details.

If you have already taken or anticipate taking a distribution in the near future and wish to discuss the tax issues that are related to the distribution, please give this office a call.

11/03/2015

If you are one of the many individuals or families who purchase their health insurance through the federal or a state government health insurance marketplace and are receiving an advance premium tax credit (subsidy of premium available to those with low to moderate income) to help you pay the cost of that insurance, you should make sure you report changes in family income and family size, as they occur, to the marketplace through which you purchased your insurance.

Changes in either family income or family size can have a significant impact on the amount of the advance premium tax credit (APTC) to which you are entitled. Reporting the changes as they occur allows the marketplace to adjust the APTC to the amount to which you are entitled.

Here are some changes in circumstances that you should report to the marketplace:
An increase or decrease in your income
Marriage or divorce
The birth or adoption of a child
Starting a job that provides you with or access to health insurance
Gaining or losing your eligibility for other health care coverage
Changing your residence
You can estimate (using the IRS estimator) the effect that changes in your family circumstances and income may have upon the amount of premium tax credit that you can claim.

Reporting these changes to the marketplace will help you avoid getting too much or too little advance payment of the premium tax credit. Getting too much APTC means you may owe additional money or get a smaller refund when you file your taxes for this year. Getting too little APTC could mean missing out on premium assistance to reduce your monthly premiums.

Repayments of excess premium assistance may be limited to an amount between $300 and $2,500, depending on your income and filing status. However, if advance payments of the premium tax credit were made, but your income for the year turns out to be too high to receive any amount of premium tax credit, you will have to repay all of the premium subsidies that were made on your behalf—with no limitation. Therefore, it is important that you report changes in circumstances that may have occurred since you signed up for your plan.

You should also be aware that married individuals filing separate returns are generally not allowed a premium tax credit and that any advance credit will have to be fully repaid. There are exceptions for abused or abandoned spouses and for those who meet the requirements to file as head of household.

If you have questions related to the APTC or how it may affect your particular circumstances, please give this office a call.

10/15/2015

Important Obamacare information:

We are fast approaching healthcare open enrollment and I wanted to share some important information with you and also clear up some things that the media is sensationalizing. I’ll address three areas today….
1. Annual premium increases
2. Some letters you will be getting
3. Expiration dates

Annual Premium Increases
If you haven’t heard already, you will soon….the media is reporting on ridiculously large premium increases being asked for by the insurance companies. While this is true there is another part of the story. The way it works is this…..The insurance companies file for a rate increase with the sate. The state reviews it, rejects it, and then they negotiate. So as an example, you might hear that an insurance company is asking for a 30% rate increase. After the state and the company negotiate, it ends up being 8-12%.
Since subsidies are going up, this should help offset the cost increase for many of you.

Letters you will be getting
Ok here is the crazy part…..the law says that the insurance companies must send you a letter in October telling you what the new rate will be for next year. HOWEVER, that letter has your subsidy from LAST year on it and not the new increased subsidy for next year. That makes no sense. Told you it was crazy. SO.........
THEN, in November, when the Govt calculates the new subsidies, you will get another letter with the rate for next year along with the subsidy for next year (matches new rate with new subsidy). This second letter will give you your true cost for next year.
Ok you ask, why can’t they just send one letter with the correct information on it? I wish I knew. I have complained about it and they just tell me that the law says they have to send out the October letters but the Govt does not have to calculate the new subsidies until November.
They will be using your 2014 tax return to update the subsidies.

Expiration date
This is an easy one. All policies expire on Dec 31st of each year but auto renew on Jan 1st. So don’t be alarmed if you hear in the media that the policy expires. It will auto renew. The only exception is anyone who is currently with Assurant. Assurant is leaving the business so to choose another plan. I can help you with that if you'd like. Please call me anytime to discuss.

Please plan on updating your information that the govt has for you if ….

1. If you have had any change in income or any other change in the family it's important that we update your information. For example if your 2014 tax return is much higher or lower then that your real income is going to be in 2016 then we need to make an update.
2. If you wish to change insurance companies or plans for 2016.

09/24/2015

Many changes for Obamacare coming for the 2015 tax filing season that will affect most taxpayers. Stay tuned!