The Affordable Care Act of 2010 introduced the shared responsibility payment on non-exempt American citizens who do not meet certain healthcare insurance minimum coverage requirements. The IRS will not consider a return complete and accurate if the taxpayer does not report health care coverage for the year, an exemption or a payment.
Taxpayers must either:
- Have qualifying health care coverage for every month of 2016 (including for dependents);
- Qualify for an exemption from the requirement to have health care coverage; or
- Make a “shared responsibility payment.”
This shared responsibility payment increases annually, and for the 2016 tax year, is the greater of:
Individuals must consider the tax consequences of obligations related to child support in divorce proceedings. The fact that child support payments are not deductible and the receipt of child support is not taxable sometimes creates spousal bitterness and discord in a divorce case. In this situation, the prevalent issue is the conflict between the payor’s desire to characterize his or her payment as an income tax deductible payment of alimony, while the payee-spouse wishes to treat the payment as a tax-free receipt of child support.
Individuals must consider the tax consequences of obligations related to spousal support or maintenance, also known as alimony, in divorce proceedings. Many soon to be ex-spouses often fail to realize that there are tax consequences for these types of payments, which may cause further economic hardship and even emotional stress.
Spousal support typically refers to the money a legally married spouse pays to the other spouse while they are still married. Spousal support may last as long as the marriage continues. Spousal maintenance consists of payments an ex-spouse pays to his or her ex-spouse after the dissolution of the marriage. The amount and duration of spousal maintenance are defined in the divorce decree. Some states refer to spousal maintenance as alimony. It often is used as a generic term to describe both types of support and will be used as such in this blog.
In the spring of 2017, the IRS will begin outsourcing the collection of not all, but some, overdue federal tax debts to private contractors. In early December of 2015, President Obama signed into law the Fixing America’s Surface Transportation Act, or “FAST Act.” The FAST Act provides funding for transportation project over the next ten years. Of course, any bill related to highways is likely to include provisions requiring the IRS to use private debt collection companies, which this bill, in fact, includes.
As fall of 2016 commenced, many Olympic and Paralympic athletes received good news as President Obama signed a bill which allowed these athletes an exemption from income taxes. The Joint Committee on Taxation’s cost analysis estimated that the bill would cost the government $3 million in lost tax revenue over the next 10 years, which is hardly significant. The bill is retroactive so that it applies to medals won during the Rio Olympics.
Many Americans took home gold, silver, and bronze medals from the Summer Olympics in Rio de Janeiro as 121 medals were won by American athletes. Members of the U.S. Olympic team were paid $25,000 for each gold medal, $15,000 for each silver medal and $10,000 for each bronze medal.
One redeemable quality about humans is that we tend to be more willing to loan money than borrowing it. No one really likes to borrow money, but if a friend is in need, many of us help as much as our financial means allow. When this occurs, it is important to understand that there are income tax consequences for both lenders and borrowers when interest is earned, paid or forgiven on a loan. This blog will address the tax consequences of unpaid loans.
Startup business owners must consider the legal and tax considerations associated with selecting a particular type of business structure. This is the fifth part of a series of blogs on the tax treatment of business entities. This final segment will address the tax treatment of S corporations.
S corporations are entities that elect to pass corporate income, losses, deductions, and credits through to their shareholders who report any flow-through income and losses on their personal tax returns and taxed at individual income tax rates, similar to a partnership. Thus, S corporations avoid double taxation on corporate income, unlike C corporations. However, S corporations are responsible for tax on some capital gains and passive income at the corporate level. The rules for Subchapter S corporations are found in Subchapter S of Chapter 1 of the Internal Revenue Code.
Startup business owners must consider the legal and tax considerations associated with selecting a particular type of business structure. This is the fourth part of a series of blogs on the tax treatment of business entities. This blog will address the tax treatment of corporations, often referred to for tax purposes as C corporations.
Like an individual person, a corporation may be taxed and held legally liable for its actions. Individual shareholders are generally not personally liable for the debts of a corporation. This is one of the primary reasons that corporations are formed. When one or more individuals form a C corporation, they create an entity with two separate types of taxpayers, the corporation, and the shareholders. As a separate tax-paying entity, a corporation files Form 1120 or 1120-A, U.S. Corporation Income Tax Return.