Jan 132015
 
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​2015 Payroll Tax Changes

The 2015 Social Security wage base has increased from $117,000.00 to $118,500.00. As in prior years, there is no limit to the wages subject to the Medicare tax; therefore, all covered wages are still subject to the 1.45 percent tax.

Wages paid in excess of $200,000 in 2015 will be subject to an extra 0.9 percent Medicare tax.

The FICA tax rate, which is the combined Social Security tax rate of 6.2 percent and the Medicare tax rate of 1.45 percent remains at 7.65 percent for 2015. The maximum social security tax employees and employers will each pay in 2015 is $7,347.00.

Disclosure of Material Connection: Some of the links on this blog are “affiliate links.” This means if you click on the link and purchase the item, I might receive an affiliate commission. Regardless, I only recommend products or services I use personally and believe will add value to my readers. I am disclosing this in accordance with the Federal Trade Commission’s 16 CFR, Part 255: “Guides Concerning the Use of Endorsements and Testimonials in Advertising.”

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Feb 262014
 
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IRS Reminds Individuals of Health Care Choices for 2014

Everyone has important decisions to make concerning health care coverage in 2014.  Starting in 2014, you must choose to either have basic health insurance coverage (known as minimum essential coverage) for yourself and everyone in your family for each month or go without health care coverage for some or all of the year.

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.

If you choose to have health care coverage, qualifying coverage includes:

  • health insurance coverage provided by your employer (including COBRA and retiree coverage),
  • health insurance coverage you purchase through a Marketplace,
  • Medicare, Medicaid or other government-sponsored health coverage including programs for veterans, or
  • coverage you buy directly from an insurance company.

If you purchase health insurance coverage through the Marketplace, you may be eligible for financial assistance including the premium tax credit, which will help lower the out-of-pocket cost of your monthly insurance premiums.

Qualifying coverage does not include certain coverage that may provide limited benefits, such as coverage only for vision care or dental care, workers’ compensation, or coverage only for a specific disease or condition.

If you choose to go without coverage or experience a gap in coverage, you may qualify for an exemption if you do not have access to affordable coverage, you have a gap of less than three consecutive months without coverage, or you qualify for one of several other exemptions.  A special hardship exemption applies to individuals who purchase their insurance through the Marketplace during the initial enrollment period but due to the enrollment process have a coverage gap at the beginning of 2014.

If you (or any of your dependents) do not maintain coverage and do not qualify for an exemption, you will need to make an individual shared responsibility payment with your return. In general, the payment amount is either a percentage of your household income or a flat dollar amount, whichever is greater. You will owe 1/12th of the annual payment for each month you (or your dependents) do not have coverage and are not exempt. The annual payment amount for 2014 is the greater of:

  • 1 percent of your household income that is above the tax return filing threshold for your filing status, such as Married Filing Jointly or single, or
  • Your family’s flat dollar amount, which is $95 per adult and $47.50 per child, limited to a maximum of $285.

The individual shared responsibility payment is capped at the cost of the national average premium for the bronze level health plan available through the Marketplace in 2014. You will make the payment when you file your 2014 federal income tax return in 2015.

For more information about the individual shared responsibility provision and the premium tax credit, visit IRS.gov/aca. Visit the Department of Health and Human Services at HealthCare.gov for more information about health insurance coverage options and the Health Insurance Marketplace, financial assistance and exemptions

 

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Disclosure of Material Connection: Some of the links on this blog are “affiliate links.” This means if you click on the link and purchase the item, I might receive an affiliate commission. Regardless, I only recommend products or services I use personally and believe will add value to my readers. I am disclosing this in accordance with the Federal Trade Commission’s 16 CFR, Part 255: “Guides Concerning the Use of Endorsements and Testimonials in Advertising.”

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Feb 202014
 
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Tax Tip: Social Security

The Social Security wage base increases for 2014 to $117,000, up by $3,300 from 2013. The tax rate imposed on employers and employees remains at 6.2%. The Medicare tax rate also remains stable for 2014 at 1.45% for employers and employees. However, the 0.9% Medicare surtax applies to single individuals with wages exceeding $200,000 and couples earning more than $250,000. The surtax doesn’t affect the employer’s share. Self-employed individuals are also subject to the surtax.

Social Security benefits increased by a mere 1.5% in 2014, due to low inflation. The earnings limits are increasing as well. Individuals who become age 66 in 2014 do not lose any benefits if they make $41,400 or less prior to reaching age 66. Individuals between ages 62 and 66 by the end of 2014 can make up to $15,480 without losing any of their benefits. There is no earnings maximum once an individual becomes 66 years of age. The amount needed to qualify for coverage increases to $1,200 per quarter. Therefore, earning $4,800 anytime during 2014 will net the full four quarters of coverage.

The threshold for the nanny tax increases to $1,900 for 2014.

 

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Disclosure of Material Connection: Some of the links on this blog are “affiliate links.” This means if you click on the link and purchase the item, I might receive an affiliate commission. Regardless, I only recommend products or services I use personally and believe will add value to my readers. I am disclosing this in accordance with the Federal Trade Commission’s 16 CFR, Part 255: “Guides Concerning the Use of Endorsements and Testimonials in Advertising.”

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