HBKS Wealth Advisors’ Post

Considering Signing Up for ACA Marketplace Healthcare? Know How It Affects Your Taxes! If you're about to enroll in government healthcare through the ACA Marketplace, it's important to understand how your health insurance will impact your tax return. Here's what you need to know: You will receive a 1095-A form at the end of the year, which is used to reconcile your healthcare coverage on your tax return. Underestimating your income when applying for coverage can lead to a significant tax bill later. We've seen individuals owe up to $18,000 at tax time due to underreporting their income. To avoid this, it's crucial that you accurately estimate your income when signing up. Don't let an insurance agent incorrectly apply with an underestimated income, or you could end up with a financial surprise. 🔗 Learn more about the ACA Premium Tax Credit and how it works: https://lnkd.in/gdHt-Fv At Blue Heron CPAs, we help individuals and businesses stay informed about their tax obligations. If you're looking for more guidance on healthcare and tax planning, follow us for professional insights and tips! #ACA #HealthInsurance #TaxPlanning #PremiumTaxCredit #BlueHeronCPAs #TaxTips

Payments made by a partnership on behalf of a partner that provides services to the partnership are treated as guaranteed payments. Guaranteed payments are deducted by the partnership and reported as income by the partner on his/her tax return. Guaranteed payments are subject to self-employment tax, thereby satisfying the rule that the individual taking an “above the line” deduction on their personal income tax return has paid social security tax on an amount of income equal to or greater than the medical insurance premiums being deducted. The health insurance policy must be established under the name of the partnership or must be a direct reimbursement to the partner for a premium being paid. If this condition is not met, the partner will not receive an “above the line” deduction. Similar rules apply in the case of HSA payments. The payments for partners that provide services are included as guaranteed payments. If the partner is not providing services, then it is considered a distribution (not deductible by the partnership, not included as income by the recipient. However, keep in mind, since the partnership did not deduct the expense, the partnership income will be higher and lastly, the partner can deduct the HSA contribution on their individual tax return). cpa #accounting #accountant #fiscallyfit #specialist #financial

Reporting the Premium Tax Credit using Form 1095-A Form 1095-A is such an evident document for individuals who enrolled in a health insurance plan through the Health Insurance Marketplace. The below form contains information required when you would want to claim the Advance Premium Tax Credit credits on your tax return. Key Points about Form 1095-A and the Premium Tax Credit: Premium Tax Credit Eligibility: Form 1095-A calculates your tax credit before calculating the amount of the credit you are eligible for. Reconciling Advance Payments: So, if you received in advance the Premium Tax Credit payments during the year, you should take the information from Form 1095-A to reconcile the advance payments with the actual credit amount on the tax return. Claiming the Credit: Filing your tax return using the information on Form 1095-A, you or your preparer will compile Form 8962, Premium Tax Credit, to be used for claiming the Premium Tax Credit. The IRS website is a source of the latest information on how to correctly claim Premium Tax Credit via Form 1095-A.

Sole proprietors can deduct premiums paid on behalf of themselves, their spouse, dependents, and nondependent children under age 27. The individual must not be eligible to participate in a subsidized plan (one which an employer pays a portion of) from an employer of the individual or their spouse. The sole proprietor must have earned income from their business equal to or greater than the medical insurance being deducted. Once again, the government wants to make sure that in order to allow an “above the line” deduction, social security tax must have been paid on income equal to or greater than the medical insurance premiums being deducted. The policy may be in the name of the business or the individual. As you can see, the type of entity that you operate your business under can have a significant impact on how and when medical insurance premiums are deducted. I caution you here, as I do with many complicated areas of taxation. If you are an owner of a business and you would like to take an above the line deduction, please seek the help of a tax professional familiar with these rules. If you’d like to book an appointment with me, please send me a direct message! #cpa #accounting #accountant #fiscallyfit #specialist #financial #taxes #smallbusiness #finance #smallbusinesslove

💡Understanding the Tax Benefits and Consequences of Long Term Care Insurance (LTCI)💡 As financial professionals, we often field questions about the tax implications of Long Term Care Insurance (LTCI). Investing in LTCI can be a wise decision, but it's essential to understand both the benefits and potential consequences from a tax perspective. **Tax Benefits:** 1. Premium Deductibility: Depending on your age and the policy, premiums paid for LTCI may be tax-deductible as medical expenses. The IRS sets annual limits on the deductible amount, which tend to increase with age. 2. Tax-Free Benefits: Generally, benefits received from a tax-qualified LTCI policy are tax-free, providing a significant financial cushion when care is needed. 3. Business Deductions: For business owners, premiums for tax-qualified LTCI policies purchased for employees may be deductible as a business expense. **Tax Consequences:** 1. Non-Deductible Costs: If you're self-employed or an employee with compensation packages that do not allow for medical expense deductions, you may find that part of your premiums is non-deductible. 2. Income Limitation: There are income-based thresholds that determine if you can fully benefit from medical expense deductions. High earners may face limitations. 3. Complex Tax Situations: The interaction between LTCI deductions and other medical expenses can be complicated, requiring careful planning to maximize benefits without triggering adverse tax consequences. Effective planning is key to leveraging LTCI benefits while navigating potential tax pitfalls. As always, consult with a tax advisor or financial planner to tailor strategies to your specific situation. 🌟Have questions about how LTCI fits into your financial plan? Feel free to reach out! We're here to serve as a resource that enables you to create a well-informed future.** #LongTermCareInsurance #TaxBenefits #FinancialPlanning #TaxStrategy #LTCI #FinancialAdvisor #WealthManagement

Sole proprietors can deduct premiums paid on behalf of themselves, their spouse, dependents and nondependent children under age 27. The individual must not be eligible to participate in a subsidized plan (one which an employer pays a portion of) from an employer of the individual or their spouse. The sole proprietor must have earned income from their business equal to or greater than the medical insurance being deducted. Once again, the government wants to make sure that in order to allow an “above the line” deduction, social security tax must have been paid on income equal to or greater than the medical insurance premiums being deducted. The policy may be in the name of the business or the individual. As you can see, the type of entity that you operate your business under can have a significant impact on how and when medical insurance premiums are deducted. I caution you here, as I do with many complicated areas of taxation. If you are an owner of a business and you would like to take an above the line deduction, please seek the help of a tax professional familiar with these rules. If you’d like to book an appointment with me, please send me a message cpa #accounting #accountant #fiscallyfit #specialist #financial #taxes #smallbusiness #finance #smallbusinesslove

Payments made by a partnership on behalf of a partner that provides services to the partnership are treated as guaranteed payments. Guaranteed payments are deducted by the partnership and reported as income by the partner on his/her tax return. Guaranteed payments are subject to self-employment tax, thereby satisfying the rule that the individual taking an “above the line” deduction on their personal income tax return has paid social security tax on an amount of income equal to or greater than the medical insurance premiums being deducted. The health insurance policy must be established under the name of the partnership or must be a direct reimbursement to the partner for a premium being paid. If this condition is not met, the partner will not receive an “above the line” deduction. Similar rules apply in the case of HSA payments. The payments for partners that provide services are included as guaranteed payments. If the partner is not providing services, then it is considered a distribution (not deductible by the partnership, not included as income by the recipient. However, keep in mind, since the partnership did not deduct the expense, the partnership income will be higher and lastly, the partner can deduct the HSA contribution on their individual tax return). cpa #accounting #accountant #fiscallyfit #specialist #financial

Payments made by a partnership on behalf of a partner that provides services to the partnership are treated as guaranteed payments. Guaranteed payments are deducted by the partnership and reported as income by the partner on his/her tax return. Guaranteed payments are subject to self-employment tax, thereby satisfying the rule that the individual taking an “above the line” deduction on their personal income tax return has paid social security tax on an amount of income equal to or greater than the medical insurance premiums being deducted. The health insurance policy must be established under the name of the partnership or must be a direct reimbursement to the partner for a premium being paid. If this condition is not met, the partner will not receive an “above the line” deduction. Similar rules apply in the case of HSA payments. The payments for partners that provide services are included as guaranteed payments. If the partner is not providing services, then it is considered a distribution (not deductible by the partnership, not included as income by the recipient. However, keep in mind, since the partnership did not deduct the expense, the partnership income will be higher and lastly, the partner can deduct the HSA contribution on their individual tax return). #cpa #accounting #accountant #fiscallyfit #specialist #financial

Our July Trust Update is here! The Double Exemption provisions of the Tax Cuts and Jobs Act of 2017 are set to “sunset” on December 31, 2025, which would essentially cut the estate and gift tax exemption in half. This has some people wondering if there might be steps to take today to avoid those future taxes. Also in this issue, a new U.S. Supreme Court decision complicates estate planning for some small businesses. The newly vulnerable ones use company-owned life insurance to provide funding for stock redemptions. You can learn more about both of these topics and more in this month's issue of our Trust UPDATE. Read our July issue by clicking the following link: https://lnkd.in/eVAcZfMx To sign up to receive these monthly newsletters, click here! https://lnkd.in/g4KDif9...

Are you self-employed? Understanding self-employment taxes is crucial for managing your finances and staying compliant with the IRS. Unlike traditional employees, self-employed individuals pay both the employee and employer portions of Social Security and Medicare taxes, commonly known as the self-employment tax. But don’t worry, there are strategies to make this process easier and even reduce your taxable income, like claiming deductions for home office expenses, internet costs, and health insurance premiums. Preparation is key, so don’t wait until the last minute. Let’s simplify self-employment taxes together! Have questions or need help? Reach out for expert guidance and tips on how to manage your self-employment taxes like a pro! #FreelancerFinance #TaxPlanning #SelfEmployed #CPAAdvice #IndependentBusiness