As your mailbox fills up with information required to organize your 2015 tax records, there is still time to reduce 2015's tax obligation with a contribution to an IRA. This issue covers recent news from the IRS and provides an important update for small business treatment of small capital purchases. An interesting perspective on the popular "free shipping" marketing technique rounds out this month's newsletter.
As always, should you know of someone who may benefit from this information please feel free to forward this newsletter to them.
A Couple IRS Wrinkles That May Impact You
The IRS made two recent announcements that may impact you this tax-filing season. Being aware of these announcements may keep you from unknowingly delaying filing your tax return.
One topic is regarding proof you have qualified health insurance and the other topic is an error in notices sent to victims of IRS identity theft.
Extension in
Form 1095 reporting
|  |
For 2015 tax returns, everyone employed by a company with 50 or more employees will receive a new Form 1095. This form is in addition to the Form 1095-A's received by other taxpayers using the Marketplace to purchase their health insurance. You need this form to file your taxes as it provides the necessary proof that you have adequate health insurance for the year. Without this proof you could be subject to the new shared responsibility tax.
What is happening
The IRS has granted an extension for Form 1095 B and 1095 C being sent to employees. Here are the old and new dates.
| Form | Purpose | Original
due date | New
due date |
| 1095 B & 1095 C | Report to employees of adequate health insurance coverage by month | 2/1/2016 | 3/31/2016 |
| Summary forms 1094 B & 1094 C | Summary forms sent to the government confirming employee health care coverage | 2/29/2016
(3/31 if filing electronically) | 5/31/2016
(6/30 if filing electronically) |
Note: This delay does not impact the timing of Form 1095 A, Health Insurance Marketplace Statement. 1095 A is the form you receive if you purchase your health insurance through the Marketplace and not through your employer.
What it means to you
Since the IRS understands that taxpayers do not wish to wait to file their 2015 tax returns, the IRS is allowing you to file your 2015 tax return without receiving this form. Here are some suggestions.
 | Check with your employer. If you work for an employer with more than 50 employees, check with your human resources department to find out when you can expect to receive the 1095 form. If there is no delay, then wait for Form 1095. |
| Look for other supporting documents. For 2015, the IRS will allow you to support your insurance coverage with means other than Form 1095. Simply collect this proof of insurance and save it in case of a future audit. |
| Wait. If you changed jobs or have a situation that suggests there may be a gap in insurance coverage you may wish to wait until you receive your documents. There is no corresponding delay granted to file your tax return. Federal taxes owed are still due on or before April 18th. |
Identity theft PINs are for 2015 not 2014
If you are one of the unfortunate victims of IRS identity theft you will need a one time PIN to file your tax return. This numeric identifier is sent to you via mail by the IRS.
What has happened
IRS PIN notice ( letter: CP01A) is being mailed to identity theft victims right now. The tax year on many notices is incorrectly stated as 2014, when the PIN is to be used for your 2015 tax return. This mistake is causing confusion among taxpayers. |
What to do
| Do not throw out the notice! This PIN is for your 2015 tax return. Without it you cannot file your 2015 tax return. |
| File your tax return. Remember identity theft victims who are provided this PIN must submit their tax return with this PIN entered in the correct field. You may not efile your tax return without it. |
The IRS made two recent announcements that may impact you this tax-filing season. Being aware of these announcements may keep you from unknowingly delaying filing your tax return.
Read full article
There is Still Time for Retirement Funding
| There is still time to make a contribution to a Traditional IRA or Roth IRA for the 2015 tax year. The annual contribution limit is $5,500 or $6,500 if you are age 50 or over. Prior to making the contribution, if you (or your spouse) are an active participant in an employer's qualified retirement plan, you will want to make sure your modified adjusted gross income (MAGI) does not exceed certain thresholds. There are also income limits to qualify to make Roth IRA contributions. The limits are outlined here. |  |
2015 IRA Contribution limit: $5,500 or $6,500 (with age 50+ catch up provision)
| 2015 IRA Income (MAGI) Limits |
Filing
Status | Traditional IRA
allowed contribution range | Roth IRA
allowed contribution range |
Full
contribution | Phase-out
complete | Full
contribution | Phase-out
complete |
| SINGLE | $61,000 | $71,000 | $116,000 | $131,000 |
| MARRIED |
| $98,000 |
| both participating |
|
| $118,000 |
| both participating |
| $183,000 | $193,000 |
|
| $183,000 |
| spouse participating |
|
| $193,000 |
| spouse participating |
| | |
Note: Married Traditional IRA limits depend on whether either you, your spouse or both of you participate in a qualified employer-provided retirement plan. If married filing separate and either spouse participates in an employer's qualified plan, the income phase-out to contribute is $0 - $10,000.
A final thought
If your income is too high to take advantage of these IRAs you can always make a non-deductible contribution to an IRA. While the contributions are not tax-deferred, the earnings are not taxed until they are withdrawn.
Remember you have until you file your tax return to make a contribution to a Traditional IRA or Roth IRA for the 2015 tax year. The annual contribution limit is $5,500 or $6,500 if you are age 50 or over.
Read full article
Free Shipping is Not so Free
One of the most successful selling techniques used today is to offer "free shipping" for mail and internet orders. But shipping is never free. It always has a cost. So why is it such a popular offer to buyers of goods and services?
Read full article
IRS Revises Safe Harbor Repair Regulations
In November the IRS increased the amount your business can expense versus capitalize from $500 to $2,500. This change impacts businesses that do not publish applicable financial statements. The new rule takes effect starting in 2016, but there is audit protection for using this new limit in prior years.
What this means
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This new rule is typically referred to as the safe harbor de minimis limit. Now small businesses may expense versus capitalize purchases of equipment that cost less than $2,500 and not have it challenged by the IRS. Without this change, small businesses would need to capitalize these purchases and then recapture the cost using depreciation over many years.
The irony is that with the recent extension of bonus depreciation through 2019, many small businesses would already expense many of these purchases. If this change could impact recent purchases of your business please ask for a review of your situation.
In November the IRS increased the amount your business can expense as a repair from $500 to $2,500. This change impacts businesses that do not publish applicable financial statements. The new rule takes effect starting in 2016, but there is audit protection for using this new limit in prior years.
Read full article
As always, should you have any questions or concerns regarding your situation please feel free to call.
