Theresa Arndt, CPA

If you can afford health insurance but choose not to buy it, you must pay a fee called the individual shared responsibility payment.  You might also see it referred to as the "penalty," "fine," or "individual mandate." But you may be wondering, "Which costs less, health insurance or the penalty?" That is a good question since the decision of whether you will purchase health insurance for 2016 needs to be made NOW.   If you want coverage to begin January 1, 2016 your last day to sign up is December 15th.   Also, many people are under the false impression that the tax penalty is only $95 and that it's cheaper to pay the penalty rather than purchase health insurance.     So what is the tax penalty for not having insurance in 2016?  Let's find out. As the table above shows, you will pay… Either a fixed fee  OR   a percentage of your income, whichever is  greater . The fixed fee penalty usually hits low income families...

The IRS issued  Notice 2015-17 clarifying the application of Notice 2013-54 to certain situations. The notice provides relief for employers who are not applicable large employers (ALES), as defined in §4980H. In summary, the IRS will not assess any penalties for reimbursement arrangements for 2014 through June 30, 2015. After June 30, 2015, the IRS states they may start assessing penalties. Specifically, the IRS addresses: The transitional relief through June 30, 2015. The treatment to 2% S corporation shareholders. Reimbursing for Medicare, TRICARE or Medigap. Increasing employee compensation on an after-tax basis in a way that is not tied to health insurance. Treating insurance reimbursements as taxable wages. The IRS confirmed that for the time being, they'll allow an S corporation shareholder to deduct reimbursed insurance as a self-employed health insurance under §162 (l).  The IRS has also clarified that treating insurance rei...

With the fiscal cliff stealing the spotlight over the holidays, very little attention was given to two new taxes that started January 1.   Thanks to the Affordable Care Act (also known as Obamacare) the first wave of tax increases rolls out in 2013 to help fund the massive 2010 health care reform.   The new taxes on wages and investment income are expected to raise about $318 billion over 10 years.   Granted the bulk of these taxes fall mainly on the wealthy and the health care industry, but sooner or later we will all be paying more.   To find out who pays and how much, keep reading: Increased Medicare payroll tax Currently, the Medicare payroll tax is 2.9% and it applies to earned income only.   An employee is responsible for 1.45% of the tax and it’s deducted automatically from the paycheck.   The employer kicks in the other 1.45%.     Under the new tax provision, most taxpayers will continue to pay the 1.45% Me...