TCJA temporarily lowers medical expense deduction threshold

With rising health care costs, claiming whatever tax breaks related to health care that you can is more important than ever. But there’s a threshold for deducting medical expenses that may be hard to meet. Fortunately, the Tax Cuts and Jobs Act (TCJA) has temporarily reduced the threshold.

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4 Questions You Should Ask Your Tax Advisor This Tax Year

According to a piece in Business News Daily, tax year 2015 brings some new challenges and opportunities for small business owners in Boston and throughout the U.S. business landscape. If you want to stay ahead of the curve, you probably should ask our tax advisor a few questions.

Here are four to get you going:

Question 1. How does The Affordable Care Act (aka: Obamacare) affect my business?

The challenge: The act added another 2,400 pages to the already prodigious tax code. The IRS is now the gatekeeper for employee insurance coverage rules, which go into effect as follows:

  • January 1, 2015: Businesses with 100 or more workers must offer health insurance to 70 percent or more of their full-time employees.
  • January 1, 2016: The minimum number of employees drops from 100 to the 59-99 range.

tax planning services bostonTax penalties include up to $2,000 per non-covered employee. The IRS will audit employees’ W2 forms as employers report the cost of health coverage they provide. One tax expert from a Los Angeles-based tax advisory firm puts it succinctly: “It’s going to be a big regulatory nightmare.”

Question 2. I rely on online sales to out-of-state buyers. Will I have to report and collect sales taxes for states other than my own?

The short answer:  If you do business on line, your days of out-of-state “tax-free clicks” are probably numbered.  The reintroduction of the so-called “Marketplace Fairness Act” gives each state the authority to force out-of-state businesses to collect sales tax from online or catalog purchases.

The bill is now in the Senate and has bipartisan support. (See for updates.)

Question 3.  How will Republican control of both houses affect the tax laws that regulate my business?

Again, the short answer: The Republicans are in charge and  “everything is on the table.”   Now in control of both houses of Congress, the Republicans could have significant impact on taxes.  According to the chairman Senate Finance Committee, there could be “new momentum” for overhaul of the U.S. tax code in 2015, which could impact the business tax burden.

Stay tuned to find out if Republican election promises materialize beyond the bluster, inaction and finger pointing that has characterized the U.S. Congress for so long.

Question 4. What can I do to keep from being overwhelmed by tax laws and IRS regulations?

A partial answer involves staying ahead of the curve.  Business owners don’t have to become overwhelmed. Take the following steps to go from reactive to proactive:

  • Keep taxes top of the mind all year long. Tax planning has to be a year-round effort. Just as in personal tax returns, waiting until the last minute complicates the process and limits options.
  • Avoid business decisions based on assumptions that existing tax breaks will continue. One expert advises clients “to make sure the tax tail isn’t wagging the dog.” Don’t make business decisions based solely on taxes. Keep the business in the forefront. If the tax breaks come, that is definitely a bonus.
  • Stay aware, and informed. Business owners need to keep up with laws and the myriad IRS regulations. Even with expert help, business owners need to stay alert to stay ahead.

Finally, if you haven’t already done so, hire a pro. If you overlooked business tax credits and deductions because of poor record keeping, or you are simply unready to cope with the burden of Obamacare, it’s not too late to catch up. Make 2015 the year you finally got the year-round tax planning, guidance and professional tax practice can provide.

Contact Dukhon Tax about all your tax concerns and start tax planning in advance to increase your bottom line!

Fast Facts: Affordable Care Act

Dukhon Tax advisors have been answering many questions in relation to ObamaCare and the Affordable Care Act (ACA). We hope these fast facts help with your 2014 tax preparation.

facts about obamacare

  • The IRS opens the 2014 tax filing season on Tuesday, January 20, 2015.
  • Taxes must be filed by the IRS deadline: Wednesday, April 15, 2015.
  • When filing 2014 taxes, you must report the status of your health care coverage and any cost assistance you received.
  • Forms 1095-A, 1095-B or 1095-C from your insurer will detail the months you had coverage. In the event you have multiple sources of coverage, you will receive multiple forms.
  • Did you, or a dependent household member, go three months or more without minimum essential coverage? You will need to make a Shared Responsibility Payment or file an exemption.
  • Exemptions are only valid with an Electronic Confirmation Number (ECN). This number is provided by the Health Insurance Marketplace. Exemption requests take time to process. Ensure you apply early to avoid late tax filing penalties.
  • Taxes filed in 2015 are subject to the 2014 fee rate. Cost assistance is based on the 2013 Federal Poverty Guidelines. Annual fee rate for not having insurance (2014) is $95/adults, $47.50/child, family $285, or 1% of household income to a max threshold. In 2015, the annual fee rate for not having insurance jumps to $325/adult, $162.50/child, family $975, or 2% of household income to a max threshold.
  • Income below the minimum threshold for filing a tax return? You are exempt from the fee for not having coverage, but may qualify for Medicaid or Marketplace cost assistance.
  • Made less than you projected? Opted not to take the full tax credit in advance? If you did not update your Marketplace information, you need to deduct the remaining amount on your Federal income taxes. See Form 8962 – Premium Tax Credit (PTC).
  • Small business owners can use the Small Business Health Options Program (SHOP) to obtain coverage and credits for their employees.
  • Minimum essential coverage can only be obtained during open enrollment.
  • Unlike the typical methods of collection (liens, jail time), the IRS is not able to enforce the Individual Shared Responsibility Provision. Instead, the IRS will withhold your Federal Income Tax refund.

To learn more about the Affordable Care Act, the Individual Shared Responsibility Provision or view IRS publications, please visit:

For personal or business tax preparation, or to obtain guidance with the Affordable Care Act, the team at Dukhon Tax is ready to help. Visit us at

Reporting Your Affordable Care Act ("ObamaCare") 2014 Taxes

Confused by the tax filing requirements under the Affordable Care Act (ACA)? You are not alone. Filers for 2014 must report healthcare coverage on form 1040 in the taxes section on page 2.
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