Obamacare’s Impact On 2014 Taxes

Researchers have unveiled an ignorance on the part of the American public: a full 48 percent of people in the United States do not know that they must report their health insurance status on their 2014 federal income tax returns.

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The tax-filing season is soon on its way, and most Americans 18 and over do not realize that health care and income taxes are connected. This information was uncovered by an online Intuit TurboTax Health Survey which was conducted by the well-known Harris Poll group.

According to the Affordable Care Act, otherwise dubbed “Obamacare,” all Americans have to show that they have qualifying health insurance coverage. Proof has to be presented when they file their 2014 income tax returns. If they do not, they can face a penalty.

The study also shows that many Americans who do not have health insurance–a full 62 percent of them–know that they will incur a penalty if they do not have health insurance. However, 87 percent of people do not know that the time to avoid a tax penalty for the year 2014 has already come and gone. Insurance purchased during the current open enrollment time which goes through February 15th will be applied to income tax returns which are filed in 2016.

Sacha Adam, Affordable Care Act product leader for TurboTax software, says that many people in the United States do not understand there is a correlation between income taxes and health care insurance.

The Intuit survey also showed that 9 of 10 Americans have insurance, but those living in the South are less likely to have policies. Also, almost half of Americans do not know that premium tax credits are available to make health insurance more affordable for low to moderate income families. In addition, three-quarters of Americans who got health insurance through the government marketplace will renew it next year.

For more information on this important issue, go to TurboTaxHealth.com.

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H&R Block Backs Voluntary Tax Certification Program

H&R Block Inc. has taken the forefront to elevate industry standards in tax preparation by supporting a new voluntary certification program initiated by the Internal Revenue Service.

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Tax preparers who voluntarily enroll in continuing education courses covering basic tax filings, tax updates, ethic of tax preparation and other related issues will now receive a record of completion noting their efforts. The purpose of the IRS program is to help taxpayers find qualified individuals to prepare tax returns and to help them avoid unethical practices. A study indicating that 42 million Americans have used a tax preparer with no credentials and who operates under no state regulations or minimum standards is the impetus for this program. That figure represents about 54 percent of all returns prepared by someone other than the tax filer.

In a letter supporting the program, H&R Block CEO Bill Cobb encourage the United States government to continue promoting voluntary certification actions, indicating that his company believes the U.S Congress should set standards for professional tax preparers. Until Congress passes such legislation, however, Cobb believes a voluntary certification program is essential to protect the concerns of consumers. Such a program should also include components of the Registered Tax Return Preparer Program that the IRS previously implemented, including registration, competency measures, screenings and continuing education.

Cobb has previously commented that on an appeals court ruling that the IRS cannot regulate tax preparer, indicting that the ruling hurt honest taxpayers who are entitled to basic protections.

Kansas City-based H&R Block is one of few companies that requires minimum standards from its staff. All company tax preparers must have at least 75 hours of tax law and tax return courses in the first year of employment with 15 hours of continuing education for each subsequent year. Also required is 35 hours of system, policies and procedural training.

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The U.S. Corporate Tax Rate

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Is the U.S. Corporate Tax Rate the Highest in the World?

There is a popular belief that the current corporate tax rate in the country is very high, and a reduction of the prevailing rate will stimulate investments which will have a wide range of positive effects on the economy. Those who support this theory are referring to the current rate which stands at 39.1% (the highest in the industrialized world). According to proponents, this income tax rate is putting U.S. corporations at a competitive disadvantage. But is there more to the story?

Income Tax rates by Country based on OECD 2005...

Income Tax rates by Country based on OECD 2005 data. “OECD Tax Database”. Organisation for Economic Co-operation and Development . . Retrieved 2007-01-30 . (Photo credit: Wikipedia)

The truth is that US companies pay the highest corporate tax rate, but the vast majority of them have perfected the art of not paying it. According to official government records, the amount of corporate tax collected by the government has reduced significantly over the years. The ratio of the corporate tax paid to the total pre-tax profit earned by US corporations is the lowest in history.

A recent report by the CTJ (Citizens for Tax Justice) had some shocking revelations. The organization analyzed the federal income taxes and pre-tax profits of 288 Fortune 500 corporations that recorded huge profits for the five years leading up to the year 2012. The following are some of the findings:

While the federal corporate tax rate stands at 35%, the 288 most profitable companies only paid a tax rate of 19.4% over the 5-year period. What is more shocking is that General Electric, Boeing, Verizon and Priceline.com did not pay any federal income tax over this period. 93 corporations (33.3% of those analyzed) paid a tax rate of less than 10% over this 5-year period.
Of the 288 Fortune 500 firms, 111 paid at most zero percent taxes for at least one year during this five year period. What’s interesting is that these corporations had a pre-tax profit of $227 billion, but paid no taxes. Whatever, the corporate tax rate in the country, the big companies usually find ways of paying less than they are required to.

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Looking At The TurboTax Redesign

Screenshot: Intuit's Customer Community

Screenshot: Intuit’s Customer Community (Photo credit: miss_rogue)

If you’ve used TurboTax before, then you should expect some changes this time around. Recently, Intuit’s tax software has become a little confusing. The user interface didn’t exactly welcome simplicity and efficiency. Sometimes, users would get frustrated by looping links and other problems. Such issues could easily hurt a person while preparing their taxes using the software. Intuit finally listened to customers’ concerns and made changes to the popular tax preparation software.

For TurboTax 2014, filing taxes now looks a lot smoother and easier to navigate. A complete redesign of the user interface has been undertaken and completed. Intuit stated a desire to lessen the time required to complete a return. With that in mind, the software now takes better advantage of prior year returns. TurboTax now analyzes that information and focuses upon each person’s typical tax situation. Returns are partially filled out before a person even starts their return.

While using the software, your tax liability indicator changes with each tax question. In the past, there were no real explanations for the changes. TurboTax 2014 now explains why these calculations affect your tax liability. New guides help explain various tax law changes, including Obamacare. Of course, each modification is designed to make things more simple and efficient for filing taxes and filing back taxes. Intuit has returned power to taxpayers by allowing them to complete their taxes with ease.

In the end, the company focused upon the right things for TurboTax 2014. Filing taxes is now much easier because prior returns are utilized to create a custom experience for each taxpayer. Plus, the competition hasn’t made similar bounds forward. Therefore, Intuit still offers the best tax preparation software around. Nobody needs to spend a fortune on tax preparation because Turbo Tax offers every tool a person needs to succeed each year.

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Tax Changes For The Wealthy

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2013 and 2014 taxes may be different for the wealthy due to several new tax implementations. The top tax rate may be steeper, and the actual percentage may depend upon what is included. People may be surprised by the changes, and this may be the ideal time to let TurboTax 2013 guide you through efficient tax preparation.

Income inequality continues to be a major political issue, and things like extending jobless benefits, raising the minimum wage, and imposing changes that affect the top tax rate are central to addressing this issue. Some of the newer taxes include changes to capital gains taxes, and 2013 is the first year that taxpayers will feel the impact. New payroll and Medicare taxes may effect wealthy taxpayers starting in 2013, and the increases may net $87 billion over the next decade.

The 2013 tax filing season will begin on January 31st, but wealthier individuals may already see differences in their withholding going forward. The law is applied unevenly, and this may result in withholding for some people, exemptions in some cases, and larger tax refunds for others.

Changes involving capital gains, interest, dividends, and other types of investments may increase tax bills, but income after taxes may decrease by a small percentage. The percentage may not seem like much, but losing this share of income may seem substantial. You may not know where your income will place you in terms of the current tax rate changes, but TurboTax 2013 may give you the important answers you need.

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IRS Forms To File Back Taxes

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IRS Forms To File Back Taxes

Even if one is certain there are no mistakes in the forms when following federal tax procedures, a little shiver goes down a taxpayers spine at the very thought of a letter arriving from the IRS. The Internal Revenue Service blundered recently when the office sent penalty notices to business owners who had requested an extension in filing tax return Form 5500 to file back taxes. An error in programming caused the mistake regarding the required Form 5558, the Application for an Extension of Time to File Certain Employee Plan Returns, before filing Form 5500. Normally, taxpayers are penalized if the Form 5500 is late or unfinished. However, the notice to those taxpayers who filed the proper forms in the right order received the penalty notice, CP 283, Penalty Charged on Your 5500 Return.

Legal research

Legal research (Photo credit: gwilmore (I HATE THE NEW LAYOUT!))

A letter of explanation concerning the inaccuracy was instituted November 8th to IRS employees. Citizens received a penalty notice before the Form 5558 had an opportunity to post to the accounts. Therefore, letters of explanation were prepared while telephone assistors and tax examiners were instructed to apologize to callers. Penalties were removed in all cases, up to five if the caller was a person with multiple plans or clients. If the person was responsible for more than 5 accounts, they were requested to solicit their abatement in writing. The Internal Revenue Service accepted responsibility for the penalty notice to the taxpayers and the charges were removed. It seems filing back taxes can be simple most of the time, but one small computer error can create a fiasco of work.

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