Monthly Archives: January 2015

Taxapalooza

Liberty Tax Service Rings in 2015 Tax Season With Food, Festivities and Free ACA Advice – Yahoo Finance.

Liberty Tax Service will ring in the 2015 tax season with Taxapalooza, a grand opening celebration on January 7 at more than 1,000 offices across the country. It’s not just food and fun that will be shared. Guests will be treated to free advice and information about the Affordable Care Act (ACA), which will have tax implications for the first time this season.

“I have said more than a few times that the Affordable Care Act is a game-changer,” said Liberty Tax CEO John T. Hewitt. “We opened many of our offices on November 15 to help people enroll in health insurance and apply for coverage exemptions. Now, before tax filing opens on January 20, we want to invite people in and help them really understand how this law will directly affect their taxes this year.” (emphasis added)

Taxapalooza will be a national party to celebrate the start of tax season and to assure taxpayers that Liberty Tax has the resources and the knowledge to handle all their tax issues, even with late changes to the tax code and the ongoing evolution of the ACA.

If Obamacare subsidies and/or penalties have made your tax situation complicated, use the services of a professional tax preparer. This is no place for amateurs.

If you want to complain, call your political representatives. If you want to profit off of the tax complications and chaos, purchase the publically traded tax preparation companies.

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Obamacare taxes & Penalites – The Rube Goldberg edition

New health care law complicates tax filing season for many in NC | National Politics | NewsObserver.com. NOTHING in this article is restricted to North Carolina, the problems and challenges described are NATIONWIDE issues.

The purpose of subsidies is to make Affordable Care Act plans… well “affordable” for lower income households. While a subsidy may at times accomplish this purpose, it creates a wealth of complications for these very same people.

The imminent tax law changes are likely to bewilder the people for whom the Affordable Care Act was designed: low-income people who needed help to figure out how to buy federally subsidized health insurance.

Jackson Hewitt Tax Service is predicting on its website that more than a third of people who received health insurance subsidies were overpaid and now will owe “pretty hefty repayment liabilities.” Others could end up paying hundreds of dollars in penalties for failing to buy health insurance.

This creates two issues:

  1. People who used to do their tax returns can no longer do them thanks to the complications of Obamacare
  2. The cost of tax preparation services is going to increase

Professional tax preparers plan to charge extra for sorting through the ACA’s knotty requirements. Still, they count on a flood of new customers ready to pay more in hopes of maximizing their subsidies and minimizing penalties, especially the myriads who opted to ignore the law and skip insurance coverage this year.

Isn’t capitalism great? Publicly traded tax companies include H&R Block and Liberty Tax.

Taxes are what you owe if you received too much in subsidy payments (technically advanced tax credits). Penalties are what you owe if you weren’t insured. Speaking of penalties for 2014…

The ACA’s minimum penalty this year is $95 per individual or $285 per family, but the law specifies that violators must pay the higher of two penalties. The higher penalty is calculated as 1 percent of household income above the tax filing threshold, which could come to several hundred dollars per person in many instances.

The maximum annual penalty this year, based on household income, is $2,448 per individual, and $12,240 for a family of five or more.

The penalties are docked from tax refunds, and for people who don’t get a refund this year, the penalty will be rolled over to future years, shadowing the taxpayer from year to year unless the IRS issues an amnesty.

Low-income filers are particularly vulnerable to the ACA penalty because they are dependent on tax refunds, notably the federal earned income tax credit, which can easily come to several thousand dollars per person, said Kala Shivali, franchisee of four Liberty Tax offices in Raleigh.

The sheer complexity of the new tax requirements, compounded by expected technical and administrative glitches, has some predicting that the the IRS will be in a forgiving mood this year.

“Health care systems don’t have to be this complicated,” said law professor Timothy Jost at Washington and Lee University. “I think this year they’ll have to cut people slack on this stuff.”

Read more here: http://www.newsobserver.com/2014/11/12/4317123_new-health-care-law-complicates.html?rh=1#storylink=cpy

No, they don’t have to be this complicated. Talk about jumping from the frying pan into the fire.

Prediction: Chaos

 

Read more here: http://www.newsobserver.com/2014/11/12/4317123_new-health-care-law-complicates.html?rh=1#storylink=cpy

 

Read more here: http://www.newsobserver.com/2014/11/12/4317123_new-health-care-law-complicates.html?rh=1#storylink=cpy
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Obamacare Subsidy: The IRS Violated The Law And State Sovereignty

The IRS Violated The Law And State Sovereignty – Forbes.

What does the “Affordable” Care Act say regarding subsidies…

The Affordable Care Act explicitly says that subsidies are available only “through an Exchange established by the State.” Thirty-six states defaulted to the federally-created exchanges in 2014, making their residents ineligible for health insurance subsidies if the Supreme Court rules that the law means what it says.

One would think when it comes to the rule of law, that words mean things. Color me moderately skeptical.

The IRS ruled that applicants enrolling through a federal exchange (healthcare.gov) would also be eligible for subsidies. This act, combined with other aspects of the law appears becomes a states right issue.

In arguing that the subsidies are legal, the Obama administration “fails to consider the provision’s place within our constitutional structure,” the brief argues. The language of the statute is self-contradictory and ambiguous and “cannot justify the agency’s encroachment” upon State sovereignty. Regulation of health insurance has traditionally been a responsibility of the states, and the Affordable Care Act contained a number of provisions that reinforced that authority, including a choice of whether or not to establish an exchange. If they did, their citizens would receive subsidies, but their insurance markets would be subject to much greater federal control. The trade-off is that if they did not, citizens and businesses in the state would be protected from a number of the ACA’s mandates and financial penalties. (emphasis added – Ed)

“The IRS Rule eliminated the statutory choice by imposing those tax burdens in all States – even those that declined to establish their own Exchanges. The result is a more expansive exertion of federal regulatory control over health insurance than the statue authorized.”

The brief cites case previous law that says “if Congress intends to alter the ‘usual constitutional balance between the States and the Federal Government,’ it must make its intention to do so ‘unmistakably clear in the language of the statute.’” (emphasis added)

Congress did not do that, making a strong argument that the Supreme Court should decide that the IRS Rule is illegal.

Separately, the Galen Institute is working with colleagues on a policy recommendation for Congress to create a safety net for those who would lose their health insurance if SCOTUS agrees that the subsidies in federal exchanges are illegal. Stay tuned for details.

Unfortunately, you can still color me skeptical. However, Republican’s DO need to have a Plan B in case SCOTUS does rule in their favor.

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An Angry Dad’s Reaction to Dr. Gruber

Articles: An Angry Dad’s Reaction to Dr. Gruber.

As you read this, remember a few of the many promises such as:

  • If you like your doctor you can keep your doctor
  • Obamacare will lower premium by $2500 for a family of 4

In it’s entirety….

If you know what’s good for you Jonathon Gruber, you’ll stay the hell away from me. Why? Because you have done the unpardonable in the eyes of any father – you have brought havoc unto the finances of my youngest daughter – and her newlywed husband.
You see, Dr. Gruber, what you did not only harmed millions of Americans – many of them young – you did so based on arrogance. This is you on all of those videos – glibly counting your fellow citizens as fodder for your tortured contrivances that will ruin, or end, their lives in many cases – without any remorse or perspective whatsoever. This is a damnable quality held by many who hang out in the faculty lounge. And you are obviously eaten up with it.
As an MIT professor, it is your place to do so, and our place as unfortunate rubes to just deal with it.
This faux superiority is obviously what was rolling around in your head as you made statements about the “stupidity” of the voters and the “lack of transparency” being a plus – not to mention the need to lie about the loss of coverage options and doctors. These were no accidents. As Trey Gowdy pointed out in the Issa Committee hearing, you said such things over and over again. As Darrell Issa added, these statements were apparently popular with your audiences as well.
I submit that you’re detestable with no business whatsoever making grand plans for your planned utopian society. And yet, due to many flaws in our political system – some escalated in just the past six years – you can and you do. These plans never work, and yet, you are paid grotesque sums of money to dream them up.
As you told the Committee Tuesday – in a Lois Lerner-esque tone — millions of people losing their current coverage was merely “part of the calculation.” Part of the calculation? That’s all this is to you, a mathematical projection?
You arrogant bastard!
These are real lives we are talking about here. And in the case of Congressman Patrick McHenry – whose question prompted your telling response – we’re talking some 473 thousand real lives in his state of North Carolina alone! If the ratios hold, that’s some 12 million nationwide! And that’s before the wave of cancellations that are taking place right now.
Well let me tell you about this damned calculation. My 23 year old daughter, like many others, is facing a tripling, or maybe a quadrupling – or her contribution to her work place provided coverage. Calculate that you smarmy SOB. Yes, I said tripling or maybe quadrupling. The figures are not final yet. She cannot afford this, as the increase alone will swallow about 20% of her take home pay. She is not alone.
And why is this? Well, it is all just part of the calculation. You see, the magnificent bureaucrats who slither to and from government cubicles every day have deemed that the former coverage isn’t up to Obama Care standards. Never mind that the boss liked it, the employees liked it – the doctors and pharmacies liked it – all of this is academic.
Yep, those bureaucrats under Kathleen Sebelius at HHS didn’t like it. You knew this would happen. You admitted it. You and your ilk designed the excuses they could use to consider plans inferior. But hey, just part of the calculation, like you said.
What I would like to know, given that you are this renowned central planner, is can you name any example in world history where such centralized planning over a huge swath of a nation’s economy ever worked out? When have the decisions of a handful of supposedly expert technocrats ever been superior to hundreds of millions of people acting in liberty and in their self-interests?
Never.
Although I suppose you swat this reality aside with the self absorbed idea that if you had been planning – say Cuba, the Soviet economy, etc – it would have all worked. This is the luxury academics have. You can pontificate all day about how things should be done, knowing that you’ve never tried to actually do them yourself.
Until something screwy happens in our politics and society, and suddenly you can do them. You are allowed to design a health care plan that you insist is a utopian dream come true. Sure, there will be some collateral damage – a few lives ruined – but that’s all just part of the calculation. And hey, if we have to lie to get the thing passed, so be it. The ends always justify the means for tyrants.
Of course, this grand scheme of you is crashing and burning, as the daily headlines demonstrate. The rollout was a disaster; more people have lost their current coverage than have signed up as new enrollees, and prices and deductibles are skyrocketing. There are looming doctor shortages of massive proportions. Today less than 35% of physicians consider themselves independent, as compared to over 60% just a few years ago. You and your minions were going to do all of this better than the private sector. Well I’ll say this about the private sector – normally when deductibles skyrocket in private insurance, the premiums come way down and the coverage limits go up.
In other words, doc, you failed. You lied to get your way, you smirked arrogantly about it, and now your scheme is an abject disaster. The only saving grace is that your words, specifically those about the state exchanges, will probably doom ObamaCare in the Supreme Court. If this happens, know full well that your viral video infamy also played a role.
Yes Mr. Professor from MIT, you will probably do more to doom ObamaCare than any other single human alive – and it was your insufferable pomposity that did it. That will be even more satisfying than anything I could do to you.
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Thanks Obamacare: 3 Tips for Filing Taxes

CMS (Center for Medicare and Medicaid Services) has come out with a helpful document titled: 3 Tips About Marketplace Coverage & Your Taxes

The tips are:

  1. Watch your mail for Form 1095-A. It will help you file your 2014 federal taxes.
  2. Your final premium tax credit for 2014 will be computed with your federal income tax return. Use Form 8962
  3. If you didn’t have health coverage for part of 2014, use Form 8965.

The complexity is mind boggling. If you are receiving a subsidy, say goodbye to Form 1040EZ. Have a problem, call your Washington legislatures.

Download (PDF, 165KB)

 

 

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How Big is the ACA Tax Penalty?

Tax Facts | How Big is the ACA Tax Penalty?(<– click to access calculator)

The Affordable Care Act (ACA) requires most Americans to have health insurance starting in 2014. People who don’t comply have to pay a penalty, the amount of which depends on several factors, including income and family size. This calculator lets you estimate the potential ACA penalty for individuals and married couples who don’t have health insurance coverage required by the ACA.

Certain groups are exempt from the penalty tax (click for list).

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Obamacare Penalty 2015

Obamacare Penalty 2015: Deadline Fines For No Health Insurance Makes For Lousy New Year’s Resolutions.

The 2015 Obamacare penalty is where the rubber really starts to hit the road. All Americans must report on their IRS income tax documents their health insurance status for 2014. This is when the IRS will begin to collect Obamacare fines from the uninsured unless they happen to quality for Obamacare exemptions, which includes financial hardship. TurboTax has created a free online tool called “Exemption Check” for people to see if they may qualify for a waiver.

For 2014, the Obamacare penalty is a minimum of $95 per person or one percent of household income if the latter value is greater than $95. The Obamacare fines will jump in 2015 to the greater of two percent of income, or $325. By 2016, the average fine will be about $1,100, although that depends on your income. The Obamacare penalty is also capped based upon the average premium for bronze level health insurance plans, and these maximum fines are projected to be $2,448 for 2014, $2,570 for 2015, and $2,699 for 2016.

As an example of the Obamacare penalty, we will use the Tax Policy Center’s Affordable Care Act penalty calculator. Assuming you are a single person making $50,000 for the year, the Obamacare penalty will be $399 for 2014, $824 for 2015, and $1,062 for 2016. In effect, being uninsured will cost almost half of the project bronze level health insurance plan for 2016.

Obamacare Penalty Calculator

How well educated is the public in regards to Obamacare deadlines and penalties?

Unfortunately, according to News 13, only around five percent of uninsured Americans know the Obamacare deadline for the enrollment period is February 15, 2015 nor do many know that the Obamacare penalty will be rising significantly this year.“We could be looking at a real train wreck after Feb. 15,” said Stan Dorn, a health policy expert at the nonpartisan Urban Institute. “People will file their tax returns and learn they are subject to a much larger penalty for 2015, and they can do absolutely nothing to avoid that.”

Does the public understand this? By the time they understand the ramifications of the penalty, it will be too late to fix it for 2015, when the penalty will be twice as large (or larger).

 

 

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Coming soon to subsidy receivers: A more intimate relationship with the IRS

Obamacare Unleashes IRS on Americans | Policy Paper | Senate Republican Policy Committee.

 

 

 

 

The Penalty:

Early next year, the IRS will begin collecting revenue from Obamacare’s individual mandate tax penalty. Americans who fail to obtain insurance that complies with numerous Washington mandates – and who fail to qualify for an exemption from the individual mandate – face penalties of $95 ($285 per family) or one percent of household income, whichever is greater. To collect this penalty, the IRS will target people’s tax refunds.

Subsidy Reconciliation:

The IRS also plays a key role in implementing Obamacare’s complicated subsidy scheme. The health care law authorizes tax credits for people in households with income between 100 percent and 400 percent of the federal poverty level, who can’t get insurance through work or through a government program, and who reside in states that established their own exchanges. In 2012, the IRS issued an illegal rule that also extended these tax credits to people in states that use the federal exchange. (Ed note: The Supreme court will decide  if federal exchange subsidies are legal)

Form 8962 for subsidy reconciliation:

Form 8962 allows households that claim a premium tax credit to calculate the correct tax credit amount and the amount that will need to be reconciled. The form has 36 lines for entry and will require filers with any change in coverage during the year to fill in 72 boxes (six boxes per month). Altogether, Form 8962 has 95 boxes for entries for single filers and 133 boxes for entries for married filers with two dependents. People who previously used IRS’s short form (1040EZ) to file their return, and who receive credits this year, will need to switch to the more complicated long form (1040 or 1040A).

Instructions for Form 8962 consist of 15 pages of complicated terminology and worksheets that will take the average tax filer hours to understand, will be incredibly frustrating, and will undoubtedly result in many inaccuracies. . Because of the convoluted structure of Obamacare’s subsidy scheme, the instructions have to explain how tax filers should allocate tax credits under certain conditions and how they should correctly calculate tax credits if household size changes during the year, such as through marriage, divorce, birth of a child, or death of a family member. Despite their length, the instructions fail to provide directions for filers to figure out whether offered employer coverage satisfies Obamacare’s minimum essential coverage requirement.

Taxpayers who claim one of the 19 exemptions from the individual mandate must file Form 8965 with the IRS. As many as 23 million Americans may have to file a Form 8965 for the 2014 filing season. The form has 21 boxes for entries for single filers and 78 boxes for entries for married filers with two dependents. Instructions for Form 8965 take 12 pages and contain five worksheets. One tax expert told Politico, in an August 11 article, that the application requirements for some of the exemptions are “hopelessly complex.” Liberal supporters of the law agreed, telling the paper: “The folks who are helping consumers are reeling. A consumer can’t be expected to understand this.”

You can call this a Republican “hack job” but unfortunately most Republican protestations that have been ridiculed by the legacy media and Democrats have turned out to be largely truthful.

Prediction: Chaos

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For tax preparers, PPACA may bring a paperwork feast

Obamacare WILL bring a paperwork feast – For tax preparers, PPACA may bring a paperwork feast | LifeHealthPro. Only the sun coming up tomorrow morning is more certain.

At this point, Liberty Tax is predicting the PPACA form business will increase fee revenue about 2.5 percent to 3 percent in 2015, and more than that in 2016.

One source of optimism: Liberty Tax believes Form 8962 will be intimidating enough to force many consumers who have been doing their own taxes to seek professional help.

“Our franchisees are prepared for a robust tax season,” Hewitt said. (Hewitt is chairman of Liberty Tax – Ed)

Bill Cobb, president of H&R Block, is also looking forward to an increase in the percentage of tax filers who seek professional help. “Those that received an advanced tax credit will no longer be eligible to file their returns on a 1040EZ,” he said. (emphasis added in this quote)

This is going to be a giant mess. Keep it simple stupid and Obamacare are on opposite sides of the universe.

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