Skip to main content

Posts

Showing posts from February, 2014

Updated with recent IRS clarifications: What Will Be My Penalty If I Don't Get "Health Care Coverage" in 2014?

Updated August 19, 2014

What will be the penalty I will pay under the Affordable Care Act if I don't get "Health Care Coverage" in 2014?
The IRS explains:

If you don’t maintain health insurance coverage, you will need to either seek an exemption or make an individual shared responsibility payment for the period that you are not covered with the 2014 income tax return you file in 2015.
What is an individual shared responsibility payment?  Here is the answer from the IRS:
You may be exempt from the requirement to maintain qualified coverage if you: Have no affordable coverage options because the minimum amount you must pay for the annual premiums is more than eight percent of your household income,Have a gap in coverage for less than three consecutive months, orQualify for an exemption for one of several other reasons, including having a hardship that prevents you from obtaining coverage, or belonging to a group explicitly exempt from the requirement.A special hardship exempt…

Are You Required To Report Your Foreign Bank and Financial Accounts?

Reporting Your Foreign Bank and Financial Accounts: There has been much discussion about the requirements for a U.S. person to report their foreign bank and financial accounts.  There is much confusion as the requirements are relatively new and, of course, undergoing further changes.  Even the name "U.S. person" is an odd term and so are many of the requirements but the bottom line is we want to meet our obligations as U.S. persons.

Reason for Reporting Requirements: In this case we are talking about just reporting requirements.  That means the FBAR and FATCA requirements are requirements to report certain foreign bank and financial accounts under certain circumstances.  The reason behind the reporting requirement relates to the requirement on U.S. income tax returns to report all of your worldwide income.  So rest assured that if you report all your worldwide income on your U.S. income tax returns you should have no problems with your U.S. income tax returns.  The requireme…

How to Avoid Paying Income Taxes in Retirement

Retirement: How to Avoid Income TaxesThe trick to avoiding income taxes in retirement is to have access to income in retirement that comes from both taxable and non-taxable sources (has already been taxed) of money.  Realize there is a difference between taking taxable income and paying taxes on that income.  While income may be taxable to you, you will only be subject to taxes on the income that exceeds your allowed deductions and exemptions.  So you may be able to draw income from taxable sources up to the amount of your allowed deductions and exemptions and not pay Federal income tax on that income.
Taxable IncomeYour taxable income can include withdraws from tax deferred retirement accounts, earned income - income you perform work to earn - typically reported to you on a W-2 or 1099, and investment income.  Types of investment income include interest, dividends, and capital gains on money you invested in non-tax deferred accounts.  Recognize that your already taxed money invested i…