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- IRS says no e-filing until January 30
- Many looming healthcare penalties explained
By Tami Stevenson
President Obama signed the American Taxpayer Relief Act of 2012 into law January 2, 2013. With the late signing, the IRS decided to keep its ‘doors closed’ with no e-filing until January 30. Normally e-filing starts January 14 or 15 every year. This is the first year local tax professional Molly Howard can remember the IRS ever changing those dates.
“This means it’s probably going to take 3 to 4 weeks before people get their money back from the IRS (even with e-filing). Most people usually have their refund back by the end of January. Now it’s going to be pushed to the latter part of February before people start receiving their returns,” Molly Howard said. This means the last two days in January and February 1, the Internet is going to run fast and furious at the IRS with most of the country e-filing all at once.
People can have their taxes prepared now if they have a W-2 or even if they just have their check stub we can do a jump start, but still have to have the W-2 before it can be transmitted. They can be ready and waiting when the IRS does open and/or they get their W-2’s. The government asks employers to get their 1099s and W-2 forms to their employees by January 31, but they do not get penalized until February 28.
Molly Howard, owner of the Live Oak H&R Block franchise for the past 19 years has been preparing taxes for 28 years. “I’ve always enjoyed numbers and have been preparing taxes ever since I started working.” She attended a class H&R Block was offering in 1984. “I had rental property and I didn’t know what depreciation meant and wanted to learn about that.” Mr. Marion White, then the owner, offered her a job after the class. She worked for them and bought the H&R Block franchise from the White’s in 1994 and the rest is history.
There were so many tax laws ending this year, many were watching to see what the House and Senate were going to do. Final passage of the “fiscal cliff bill” on January 1, 2013, avoided many scheduled income tax rate increases.
One of the greatest items of concern was the Alternative Minimum Tax (AMT) where families making $45,000 or more would have had to pay an additional $2000 tax per family. But they changed it and put it back the way it was last year so it doesn’t hit you until you make $78,750 or more, married filing joint. For others the tax applies if you make $50,600 or more. “They called it the AMT patch for years but we never have to worry about that again because they made it permanent now and it will be adjusted for inflation in future years,” she said.
Another highlight of the new tax law is that the Bush era tax cuts have been made permanent with modifications for taxpayers with incomes over certain thresholds and many popular tax breaks such as the tuition and fees deduction and the state and local sales tax deduction have been extended to 2013. Other provisions expanded in the American Recovery and Reinvestment Act such as the American Opportunity Credit have been extended for five years through 2017.
At the end of the day when all is said and done there haven’t been many major changes to the tax laws after all, for 2012. Next we have the looming healthcare penalties that are coming for 2014.
Howard explained some of the tax penalties and requirements to the Suwannee Valley Times recently and we wanted to share it with our readers.
For businesses that have more than 50 employees they must provide health care for their employees or they will be penalized. If the business has less than 50 employees they do not have to worry about providing health care for their employees.
What if you don’t have healthcare insurance through your employer or otherwise? What will the individual penalties be for not having healthcare insurance?
According to an H&R Block estimate, for a person who made $19,911 and did not have healthcare insurance, their approximate penalty for the first year is $101.61. The next year however, in 2015, the penalty is more than tripled. It goes up to $325 for the second year for not having health insurance. So every year you don’t get health insurance the government may increase the penalty.*
According to the H&R Block website, hrblock.com/healthcare, the penalty amount for not having health insurance will be the greater of $95 or 1% of annual income per person (except for dependents under 18 who are calculated as a half) and increasing to $325 or 2% in 2015, and $695 or 2.5% in 2016. After that, it will be adjusted for inflation each year.*
According to Howard, every state can get their own health insurance. Florida has not decided to do that yet. If they do decide to get it, the subsidy would be around $87 a month for insurance for a single person.*
As far as this year is concerned, she wanted to point out some mistakes that happen frequently. For instance, people who sell their stock and do not make a profit on it think because they didn’t make a profit, they don’t have to fill out any forms. She said the IRS gets a 1099 B from the broker office saying they sold that stock so the client comes in two years later, for example, asking why they owe so much money for selling that stock. Not that they would have owed anything but it’s just that they didn’t fill out the form. She said people need to remember to fill out the forms. A lot of times they have a loss that they can carry over until it’s used up.
Another common mistake is many people that fill out their own taxes every year don’t know about certain tax credits such as the child tax credit of $1,000. If it seems like a lot of other people get a bigger tax return than you do, you may want to check this out and find out from a tax professional. If you have missed a tax credit, they can go back for three years and get that back for you.
Also for the Earned Income Credit (EIC), many people that are eligible for that miss out on it if they don’t know about it and are doing their own taxes. She remembers one gentleman that was entitled to the EIC and never claimed it. “We were able to amend his tax return and go back three years. He wound up getting $12,000 back that year.” She said, “That makes you feel wonderful when you can help somebody like that.”
If you are ever audited the old adage was seven years. Most people would tell you the IRS will only go back seven years but Howard says they can go back however far they deem necessary, especially if they suspect fraud. She is working with a client now where the IRS is going back 12 years, for example.
If you are a business she recommends keeping your receipts and all of your paperwork for 10 to 12 years and if you sell a big asset you’ll want to keep that paperwork - forever.
Molly Howard has owned and operated the H&R Block franchise in Live Oak for 19 years. She has been preparing taxes for 28 years. Pictured above is their team of tax professionals. Front Row: Vanessa Smart, owner Molly Howard, Jody Middleton and Receptionist Caitlin Verdegen. Back Row: owner Ronnie Howard and Kelly Renfroe. Not pictured are Gayle Singleton and Becky Adams.
-Photo: Tami Stevenson
“All of our employees are very well-trained, they have completed all of their tax update requirements. They have been to the IRS forums so they are very well-versed on the new tax laws this year as always. H&R Block is really good with training their people.” She said.
The H&R Block office in Live Oak is located in the Wal-mart plaza. Their hours during the tax season are 8 AM to 8 PM Monday through Friday on Saturday 9 PM to 5 PM and on Sunday 1 PM to 5 PM.
*The information provided about healthcare penalties is only an estimate and does not constitute tax or legal advice for an official calculation of your potential subsidy share of the premium payment and or tax penalty. You should use this estimate for informational purposes only and should not rely on it. This estimate is based on information from a 2012 tax return as an example only. It could differ based on other factors. Consult your state exchange or your employer for further information.