Posts Tagged ‘business tax news’

President-Elect Trump’s Impact on Your Taxes

Capitol Building

Capitol BuildingWhile some are happy and some are protesting the election of Donald Trump as our next president, one thing is certain: Changes will be made to the tax and business climate. Many are speculating about what might happen, but no one really knows what President-Elect Trump’s administration or the Congress will propose and will pass. So far the domestic markets have responded positively to the possibilities they see in the future. Europe is taking a “wait and see” posture. Both sides of the aisle agree that some sort of infrastructure initiative is necessary.
We would like to share our thoughts about the future:

  1. Overall, we might see a broadening in the tax base subject to tax, but we probably will not see a drastic reduction in everyone’s taxes. Enhanced child-care deductions are likely, as are lowered tax rates and faster write-offs for capital investments. That said, there might be an absolute cap on the amount of itemized deductions allowable, which is why we are skeptical about the likelihood of seeing tremendous reductions in taxes.

     

  2. Lifting some of the regulations on businesses might make it a bit easier for you to operate and plan for the future. By lifting or moderating some of the regulations under discussion, more new businesses will have a smoother road to success. Likewise, existing business can act more “business-like” and less defensive.

     

  3. There will be some effort to further eliminate estate and gift taxes for all but the wealthiest of our clients, but it is possible that many people will end up paying more money in taxes related to assets passed between generations. The trade-off will occur because we suspect that adjustments to the income tax basis (for determining gain or loss on the eventual disposition of those assets) will remain the original cost plus capital improvements the original purchaser paid for those assets.

 

What can you do now?

1. Be watchful and pay attention to not only the rhetoric but also the actual proposals that are floated by those who will be in control of the executive and legislative branches.

2. Be attentive to state and local proposals for both legislation and regulation so you won’t be surprised by state-level changes.

3. Spend time evaluating the human, structural, social, and intellectual capitals of your business and how a changing environment might change your strategies related to each. For instance:

  • Mind your human capital by considering whether proposed changes in regulations will change the way you will deal with your employees. How will changes to the Affordable Care Act (or repealing the Affordable Care Act entirely) impact you? See your employee benefits purveyor to help understand these changes.
  • Protect your intellectual and structural capital. Think thru innovations and other technical issues in your industry. How does technology affect the way you get things done? Are you cyber-secure?
  • What about social capital? Be sure you are speaking to your customers and your vendors about how, if at all, your relationship with them will be impacted by changes that might occur in Washington or your local State House. Keep your customers informed about changes that might come about in your industry that could affect their ability to utilize your value.

 

Regardless of whether you are celebrating or grieving the new administration, now is a great time to spend a minute and evaluate where you are and where you want to go. The currents move on, even if we want to stand still.

We are thinking about these things and more at Rose, Snyder & Jacobs, and we want to help you be intentional and understand the future so that we can work together to make the best decisions. We stand ready to assist you as you consider what the next four years or more might look like for you, your family, and your businesses.

New Business Tax Provisions Under the Affordable Care Act

At RSJ, we pride ourselves on staying on top of newly implemented regulations and requirements. As part of its primary purpose to facilitate healthcare reform, the Affordable Care Act (ACA) includes key tax provisions that affect businesses, and so we felt it is important to share the following reminders with our clients and colleagues.

While many businesses and employers waited to fully implement these provisions until the Supreme Court determined the fate of the health care reform law, the time has come for businesses to prepare to comply with the rules under ACA. Below are some reminders of the tax provisions relating to businesses. Note that the starting date of the reporting requirements, as well as the employer mandate itself, was pushed back from January 1, 2014, to January 1, 2015.

Shared responsibility payment imposed on certain larger employers

For purposes of the employer shared responsibility payment and reporting requirement, an applicable large employer is an employer that on average employed 100 or more full-time equivalent employees for 2015 and 50 for 2016. The employer mandate specifies that an assessable payment will be imposed on an applicable large employer that:

1. Fails to offer to its full-time employees (and their dependents) the opportunity to enroll in minimum essential coverage under an eligible employer-sponsored plan; and
2. The employer-sponsored plan is unaffordable relative to an employee’s household income

New reporting requirements

The Affordable Care Act also requires applicable large employers to file information returns with the IRS and provide statements to their full-time employees about the health insurance coverage the employee offered. In general, each applicable large employer may satisfy the information reporting requirement by filing Forms 1094-C and 1095-C beginning in 2016 to report information about its offers of health coverage to its full-time employees for calendar year 2015.

Health reimbursement arrangements (HRAs)

The IRS has provided guidance on the effect the provisions of the ACA have on health reimbursement arrangements where employers reimburse employees for some or all premium expenses incurred. In general, account-based health reimbursement plans that cover more than one employee are considered “group health plans” and are subject to requirements of the ACA. The penalty for maintaining a non-qualifying health reimbursement arrangement is $100 per day. Health reimbursement transition relief is available for small employers (less than 50 full- time equivalent employees) and provides that no penalty will be assessed through June 30, 2015. It is not certain whether the IRS will extend this date to allow additional time for compliance. We recommend addressing any issues as soon as possible.

Employers who wish to help their employees purchase health insurance can either:

1. Establish an ACA- compliant plan; or
2. Increase taxable salaries to help employees purchase individual coverage

Small employer health insurance credit

An enhanced version of the small-employer healthcare credit took effect as of January 1, 2014. A small employer may be eligible for a business credit of up to 50% of premium amounts paid as long as:

1. It has 25 or fewer full-time equivalent employees
2. The average annual wages of these employees are between $25,000-$50,000
3. Coverage is purchased from the SHOP exchange (this is the small business section of the “ObamaCare” health insurance exchange)

Note that excluded employees are sole proprietors, partners in partnerships, shareholders owning more than 2% of an S corporation, and family members of these owners and partners.

We can help

The majority of businesses fall below the threshold that makes them subject to the Employer Shared Responsibility provisions. However, for some, 2015 is a significant year in the implementation of the Affordable Care Act. If you have additional questions related to identifying full-time employees, whether or not you are eligible for a credit, or any other details, please call our office at (818) 461-0600. We will happily assist you.