Watch for Important NEW Tax Reporting Forms

By March 31, 2016 anyone covered by qualified health care for any month during 2015 should receive a Form 1095-A; or Form 1095-B or Form 1095-C.  These forms are due by January 31, 2017 for 2016 coverage.  

By January 31, 2015 anyone who has purchased health insurance through an exchange (Obamacare) for any part of 2014, should receive a new tax reporting form in the mail, Form 1095-A.  

If you acquire health insurance from another source (e.g.: your employer; or purchase it yourself directly from the insurance company) you will NOT receive Form 1095-A.  You MAY receive either Form 1095-B or 1095-C; but these additional two forms are not mandatory for 2014 health coverage.  If you do receive one or more of these forms make sure that you bring the form(s) to your tax return preparer at the time of your appointment.

If you are supposed to receive Form 1095-A, it is VITAL to the correct preparation of your 2014 income tax return.  DO NOT LOSE THIS FORM.  Make sure you bring this form to your tax return preparer at the time of your appointment.  You may not be able to file your tax return until you have access to that form.

Remember – only those taxpayers who purchased health insurance through an exchange have any possibility of receiving or having already received a “premium tax credit.”  This credit simply does not apply to health insurance acquired through your employer or purchased directly from the insurance company.

Remember also that if you do not meet one of the exemption requirements, you may be subject to a tax penalty for not having had “minimum essential coverage” for yourself or any of your dependents during 2014.  The penalty may be as low as $8 for one single adult with low or moderate income subject to the penalty for only one month ($95 for the whole year), to as high as $2,448 per person for very high income family units.

New for 2014 taxes (and for all years into the future), if you acquired health insurance through an exchange, your tax preparer will need income information for every dependent that you claim on your tax return in order to properly compute credits and/or penalties.

Many Businesses Misunderstand Michigan Personal Property Tax Changes.

In August 2014, Michigan voters approved changes to the state’s Personal Property Tax law.  This tax applies to businesses and not to individuals.  The changes that were approved are misunderstood by many businesses.  The Michigan Personal Property Tax has NOT BEEN REPEALED.

1) an $80,000 exemption, first applicable for 2014 was made permanent, however businesses that qualify for this exemption must file the exemption affidavit every year, not later than February 10.  Failure to file the exemption affidavit timely results in the business having to pay personal property tax in July and December  based to “true cash value” on the prior December 31.

2) A new exemption for “Eligible Manufacturing Property” begins a multi-year phase-in beginning in 2016.  The rules for applying this exemption are complex and won’t be discussed here.  Businesses who are primarily involved in manufacturing will ultimately see an exemption from the personal property tax for all qualified property by 2023 – however non-exempt property remains subject to the tax.

3) for 2015 every business that does not qualify for the small taxpayer exemption ($80,001) of value – or fails to timely file for the exemption will continue to file and pay personal property taxes just as in prior years.

4) for 2016 and subsequent years, any business that does not qualify for the small taxpayer exemption and which also does not meet the rules for the new manufacturing property exemption will continue to file and pay personal property taxes just as in prior years.  Businesses that do meet the new qualified manufacturing property exclusion will begin to see some of their qualified and previously taxable property drop off of the tax rolls; more each year through 2022.

A quick example:  On December 31, 2013 a dentist’s office had total property with a (depreciated) true cash value of $70,000.  That dentist filed a small taxpayer exemption affidavit with their local assessor before February 10, 2014.  The dentist owed no personal property tax in 2014.   However, during 2014, that same dentist acquires several new chairs and equipment at a financed cost of $140,000.  As of 12/31/2014 the (depreciated) true cash value of all property is greater than $80,001 and the dentist will not qualify for the small taxpayer exemption for 2015.  The dentist must file a personal property tax return and pay personal property taxes in 2015  Beginning in 2016, the true cash value remains well above $80,001 and also does not qualify as manufacturing property. No property is exempt for 2016 or any future year, and the dentist will pay personal property taxes on the true cash value of business property determined on 12/31 of the each prior year.   Replace the dentist with an insurance agency or a retail store — or any other business not principally engaged in manufacturing and you’ll get the same result.

I Got a Letter from the IRS

The information below offers good advice for dealing with correspondence from the IRS.  4square clients should notify our office whenever ANY IRS correspondence is received, in many cases we may already have received a copy; but make sure that we have gotten a copy (from either you or the IRS) before you ask questions about the contents!
You can fax all pages of your notice to 810-433-6020 or scan and attach to an email.

IRS Offers Tips for Dealing with Notices

Each year, the IRS sends millions of letters and notices to taxpayers for a variety of reasons. Here are ten things you should know about IRS notices in case one shows up in your mailbox.

1. Don’t panic. Many of these letters require a simple response.

2. There are many reasons why the IRS sends correspondence. If you receive an IRS notice, it will typically cover a very specific issue about your account or tax return. Notices may require payment, notify you of changes to your account or ask you to provide more information.

3. Each notice offers specific instructions on what you need to do to satisfy the inquiry.

4. If you receive a notice advising you that the IRS has corrected your tax return, you should review the correspondence and compare it with the information on your return.

5. If you agree with the correction to your account, then usually no reply is necessary unless a payment is due or the notice directs otherwise.

6. If you do not agree with the correction the IRS made, it is important that you respond as requested. You should send a written explanation of why you disagree. Include any information and documents you want the IRS to consider with your response. Mail your reply with the bottom tear-off portion of the IRS letter to the address shown in the upper left-hand corner of the notice. Allow at least 30 days for a response.

7. You should be able to resolve most notices that you receive without calling or visiting an IRS office. If you do have questions, call the telephone number in the upper right-hand corner of the notice. Have a copy of your tax return and the notice with you when you call. This will help the IRS answer your inquiry.

8. Remember to keep copies of any notices you receive with your other income tax records.

9. The IRS sends notices and letters by mail. The agency never contacts taxpayers about their tax account or tax return by email.

10. For more information about IRS notices and bills, visit IRS.gov. Click on the link ‘Responding to a Notice’ at the bottom left of the home page. Also, see Publication 594, The IRS Collection Process. The publication is available on IRS.gov or by calling 800-TAX-FORM (800-829-3676).