Broker Check

February 27, 2017

NY Driver’s License Requirement Addressed

          The New York State Department of Taxation and Finance is requiring taxpayers to provide driver’s license or state identification information along with their e-filed returns this year.  The problem is that NY announced this requirement January 12, 2017, only 11 days before the tax filing season began on January 23.

          In a frank exchange of views at the New York State Society of CPAs who met with the Acting Commissioner, it was asked, “How do they remotely think this is ok?”  While the Commissioner explained why it was thought necessary to try and prevent hacking of the NY system, no answer was made as to why the notification of the requirement could not have been made sooner so that practitioners could have advised their clients on a more timely basis.   The Trusted Professional Vol 20 No. 2 p. 1.

TD Ameritrade Reduces Cost To Trade

          Effective March 6, 2017 the cost for our Registered Investment Advisor clients to trade an equity fell from $8 a trade to $6.95, a savings of 13.125% which our clients will get to keep.

Obamacare Update

          Repealing Obamacare is not so easy.  But a first step was taken while taxpayers are filling out tax returns.

          The Individual mandate is still the law so those who went without coverage last year and do not otherwise qualify for an exemption, will owe a tax penalty.

          But, the IRS is backing off enforcing the rule in response to an Executive Order from President Trump that directed the IRS not to enforce the penalty.

          The IRS will not reject returns that fail to report health coverage status.  Taxpayers must check a box on their returns indicating full year coverage, claim an exemption, or pay a fine.  The IRS had put in place a system this year to reject 2016 returns if filers failed to indicate their health coverage status.  The IRS changed its mind after President Trump issued an Executive Order on Obamacare that directs federal agencies to use their authority to reduce potential burdens.

          As in past years, refunds will be paid even if a return is silent on  the issue of coverage.  Some have interpreted the IRS’s action to mean that taxpayers need not fully comply with the law.  This is incorrect.  The insurance requirements are still in effect.

          People who got subsidies for buying coverage on an exchange must still file a tax return in order to figure the amount of health premium tax credit you are entitled to.

Upper Income Seniors Face Higher Medicare Premiums

          Many upper income seniors will face higher Medicare premiums next year due to legislation passed in 2015, which will take effect in 2018.  Currently, Medicare Part B and D premium surcharges with modified adjusted gross incomes exceeding $85,000 for singles and couples over $170,000.  The surcharges increase as income rises.  For 2017, they max out at $370.80 per month for singles with income over $214,000 married with income above $428,000.

          The new law broadens the reach of the surcharges and the extra yearly cost for singles will exceed $1,000 and $2,000 for couples.   

Taxpayer Claiming Child Credit May Need SSNs

          People who do not have social security numbers because they are not authorized to work in the U.S. can get individual tax ID numbers from the IRS so they can file returns and pay taxes.  The law requires the IRS to deny the Earned Income Credit to these filers, but is silent about the child credit.  In the past, Treasury Inspectors have chastised the IRS for paying too many refunds to unauthorized workers claiming the child credit.  Kiplinger Tax Letter Vol. 92 No. 4.

Payroll and Human Resources Scam

          A scam that targets payroll and human resources professionals is back.  Fraudsters sending out phony e-mails to company payroll departments asking for a list of employees, W-2 data and more.  The e-mails came from bogus websites and purport to be official correspondence from higher ups in the firm.

          IRS is now warning payroll professionals to be on the alert for the second year in a row.  And now it has spread beyond the corporate world to schools, hospitals, and the like.

Are Employee Fringe Benefits Taxable?

          The IRS has a helpful guide.  It covers all kinds of workplace benefits covering employer provided cell phones, on-premises gyms, flowers, or fruit given to employees on special occasions, meals and lodging, educational assistance programs and more.  There is a table summarizing the withholding rules for the various fringes.  See IRS Publication 15-B for the details.

          As always, if you have any questions about these or any other matters, do not hesitate to call us.

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