Employer Health Insurance Rules Eased for 2015
Aug 27, 2014
Health insurance remains a big focus for employers of all sizes as the Affordable Care Act’s provisions are gradually implemented. Starting next year, certain employers will have to offer their full-time employees “affordable” health coverage that provides “minimum value” or pay a penalty if at least one full-time employee enrolls in marketplace coverage and receives a premium tax credit (basically a subsidy for buying the insurance).
The employer shared responsibility rules are applicable only to “large” employers — generally defined in the law as employers that employed on average at least 50 full-time or full-time equivalent employees on business days during the prior calendar year. An employee is a full-time employee for a calendar month if the employee averages at least 30 hours of service per week, and 130 hours of service in a calendar month is treated as the monthly equivalent of at least 30 hours of service per week.
Although the employer shared responsibility rules become effective in 2015, the IRS recently offered certain transition relief for 2015:
Employers with 50-99 full-time employees. No employer shared responsibility payment will apply during 2015 if an employer has at least 50 but fewer than 100 full-time employees (including full-time equivalents) on business days during 2014 if certain conditions are met. The basic conditions: During the period from February 9, 2014, through December 14, 2014, the employer must not (1) reduce the size of its work force and overall hours of service of its employees in order to qualify for the relief or (2) eliminate or materially reduce the health coverage, if any, it offered as of February 9, 2014.
Counting full-time employees. Employers can determine whether they had at least 100 full-time or full-time equivalent employees in the prior year by reference to a period of at least six consecutive months instead of a full year.
Coverage. Employers that are subject to the employer shared responsibility provisions in 2015 must offer coverage to at least 70% of full-time employees, rather than 95%, as one of the conditions for avoiding shared responsibility payments. Additionally, the policy that employers offer coverage to their full-time employees’ dependents will not apply in 2015 to employers that are taking steps to arrange for dependent coverage to begin in 2016.
Categories: Healthcare & Dentistry
Retire Without the Worry
Aug 25, 2014
More than half (54%) of near-retirees say they’re concerned about having enough money to last through retirement. Forty-five percent say they’ll need to work at some point during retirement.* But this doesn’t have to be your retirement story. Following these tips may give you a better retirement outlook.
Be flexible
Retiring before you’re financially or psychologically ready can put a damper on your retirement. From a financial standpoint, if you retire too soon, you risk running out of money. Periodically review your retirement investments with your financial professional to see if you’re on track for your desired retirement date. If not, you may have to work a year or two longer, which could make a surprising difference in retirement readiness. Or, if you’re able to, increase contributions to your retirement account by enough now to meet your desired retirement date.
If you haven’t thought about what you’re going to do with your time, you may be at loose ends when you retire. Explore paying and nonpaying options for keeping active before you retire. The Employee Benefit Research Institute found that many retirement-aged people have nonfinancial reasons for continuing to work full- or part-time.**
Have multiple resources
It’s good to have a fixed income source, such as Social Security benefits and/or an employer sponsored pension plan, to help cover basic expenses and variable income sources, such as a 401(k) account, an individual retirement account (IRA) and personal investments. Because these accounts have the potential to increase in value, they may help cushion inflationary price increases. You can use the funds to help cover unexpected expenses and/or pay for retirement living expenses.
Be realistic about retirement expenses
Your expenses may or may not decrease at retirement, depending on the activities you intend to pursue. Ask your financial professional to help you realistically project your future retirement expenses based on your individual needs and wants so you can judge if you’re financially ready to retire.
- Maritz Research Retirement Study, 2013, surveying individuals with less than $500,000 in retirement resources
** ebri.org Issue Brief, March 2013, No. 384
Categories: Uncategorized
Cost Accounting as a Profession
Aug 21, 2014
I am constantly amazed by the broad diversity of costing systems that are in use in American businesses today. Different industries, different products, different regions of the country all give rise to various needs in the method of costing products. It seems to me that product costing revolves around several key points. First is inventory valuation, second is profitability tracking and a possible third is management control or measurement programs for measuring the effectiveness of management.
Many cost managers are attempting to meet a broad base of cost system needs with simplified cost results at the great risk of misinforming the users of such cost data and creating further inefficiencies or lack of profitability because of this misinformation.
In my opinion at the root of this problem is a general lack of core knowledge as to what cost systems should do, can do and reasonable outcomes from the data that the cost systems provide. Further, it seems to me that there are many people in significant levels of responsibility in the area of cost management and development that have limited or no knowledge concerning how product costs should be managed yet find themselves making decisions regarding the calculations and management of this data.
This leaves cost accountants all over the country struggling with conflicting goals sometimes less than comprehensive instructions trying to provide meaningful data that improves their companies overall profitability.
I began my career with a number of low-level costing jobs. Much of this work concerned reoccurring but relatively simple tasks. Much of which I did, I did not understand and was being done in strict compliance with a set of guidelines that my supervisor laid out for me but without any real grasp as to be issues at hand.
My overall review of the process was that much of it was company policy or my supervisor’s opinions and there were no written guidelines from a technical standard point of view that was relevant to what I was doing.
As I think about the state of cost accounting today it does not appear to me that much has changed related to the overall state of technical guidance or raising cost accounting to a professional status.
As I think about many other professions including medicine, law, engineering, accounting, there are a number of common components in each of those professions that would need to exist to raise cost accounting to the level it deserves in American business. The first component would be the creation of an independent entity to act as the central control to support and oversee the profession. The second would be to create a common body of knowledge that represents guidelines and an over-arching principle of the profession. The third standard, I know exists in many professions, is some sort of recognition for having achieved an understanding of those principles whether it be by academic test, by experience or in some cases some combination of both. There needs to be some recognition of achievement by an individual in the professional area. The next thing would be the establishment of an independent body to ensure that the professionals are living up to the standards to which they agreed. The final item would be professional training sponsored by the independent body that would assure that the professional members of the group are constantly being offered the highest and best training available for that profession.
As we consider all these possibilities related to the profession of cost accounting, I believe that there is a significant opportunity today to move the technical area of cost accounting to the professional status it has long deserved and provide guidance, oversight and career development opportunities for cost accountants all over the world.
Categories: Cost Accounting
Back To School &Taxes
Aug 19, 2014
There is a chill in the air here in Northwest Ohio which means fall is on its way. Many people like the cooler temperatures, but I personally prefer the heat. After all, we are still in August! With fall comes colder temperatures and I fear a repeat of our epic winter from last year! Needless to say, I guess the fall-like weather makes it more believable that it is back to school time. What does back to school mean for you and your taxes?
If you are a college student, or the parent of one, there are various deductions and credits available for tuition payments. There is a tuition and fees deduction which reduces the amount of income that is taxed. There are also two different types of tax credits, the American Opportunity tax credit and the Lifetime Learning credit. These two credits reduce the amount of tax you owe, potentially below zero, allowing you to get a refund of taxes you did not pay. There are various stipulations required to receive these deductions, all of which would need to be discussed with your accountant based on your individual circumstance. You will receive a form 1098-T at the end of the tax year that shows how much tuition you paid to the school for the current year. Also keep in mind that any additional fees paid or costs of courses, even the cost of books, can be included. These additional expenses are ones you would need to track yourself.
Many students today finance their way through college. If you are one of those students, you can also take a tax deduction for the student loan interest paid throughout the year.
If your children or grandchildren have college in their horizon, you can save on state taxes by contributing to a state 529 plan. You can contribute as much as you would like, however, only $2,000 per child per year in Ohio is available as a deduction to your taxable income. If you contribute more than $2,000 in a year, the remainder will carry-over to be a possible deduction in future years.
If you are an educator for grades Kindergarten through twelfth grade you are eligible for a $250 deduction on your return for unreimbursed education materials purchased in the year.
If you are a parent of a school-aged child and recently purchased school supplies, I am sure you wish there was some tax incentive. Unfortunately, you only have to look forward to paying college tuition before you can get a tax deduction!
Categories: Uncategorized
Rental of Vacation Homes
Aug 14, 2014
If you rent a home to others, you usually have to report the rental income on your tax return. But you may not have to report the income if the rental period is short and you also use the property as your home. In most cases, you can deduct the costs of renting your property. However, your deduction may be limited if you also use the property as your home.
Here is some basic tax information that you should know if you rent out a vacation home:
Vacation Home – A vacation home can be a house, apartment, condominium, mobile home, boat or similar property.
Schedule E – You usually report rental income and rental expenses on Schedule E, Supplemental Income and Loss. Your rental income may also be subject to Net investment income tax.
Used as a home – If the property is “used as a home,” your rental expense deduction is limited. This means your deduction for rental expenses can’t be more than the rent you received.
Divide expenses – If you personally use your property and also rent it to others, special rules apply. You must divide your expenses between the rental use and the personal use.
Personal use – Personal use may include use by your family. It may also include use by any other property owners or their family. Use by anyone who pays less than a fair rental price is also personal use.
Schedule A – Report deductible expenses for personal use on Schedule A, Itemized Deductions. These may include costs such as mortgage interest, property taxes and casualty losses.
Rented Less than 15 days – If the property is “used as a home” and you rent it out fewer than 15 days per year, you do not have to report the rental income.
By: Diane Allman, CPA
Categories: Healthcare & Dentistry