Ryan Ellis

Surprise: Poorest Obamacare Enrollees Face $530 IRS Tax Bill

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Posted by Ryan Ellis on Tuesday, February 24th, 2015, 10:56 AM PERMALINK


The majority (52 percent) of Obamacare enrollees receiving an advance premium tax credit to purchase Obamacare insurance is facing the prospect of paying back $530 of that tax credit to the IRS, according to a new study from H&R Block.  This clawback is reducing the refunds for these taxpayers by 17 percent this filing season.

Under Obamacare, taxpayers earning between 133 and 400 percent of the federal poverty level are eligible to receive a tax credit to help purchase insurance on Obamacare exchanges.  This tax credit is calculated using old tax data of the recipients.  The credit is advanced ahead of time to the taxpayer's insurance company.  The taxpayer must reconcile at tax time the advance credit received with the actual credit she is eligible for.

Families of four earning less than $97,000 are eligible for a credit.  So is a single mother with two children earning less than $80,000 and an unmarried/childless taxpayer earning less than about $12,000.  By definition, these are the lowest income recipients of Obamacare health insurance outside the Medicaid-eligible population.  Higher income taxpayers received no tax subsidy and aren't facing this tax season surprise.

According to the study, a majority of credit recipients--52 percent--have had to pay back the IRS an average of $530, reducing their refunds by an average of 17 percent.

It remains unclear how this information relates to the revelation last week that 800,000 healthcare.gov Obamacare customers (and a further 100,000 in California) received inaccurate 1095-A tax reporting forms.  Doing the reconciliation described here would not be possible for these nearly 1 million families.

Also in the H&R Block report is the news that the individual mandate penalty is averaging $172. This is likely to rise in future years as the penalty for most taxpayers will equal 2.5 percent of their adjusted gross income.  A family earning $100,000 would see a penalty of $2500 for failing to obtain qualified Obamacare health insurance.

Top Comments

StevenNewsom

Suckers.

There is a downside to voting based on likes and wants, instead of an informed opinion, that downside is that you are easily manipulated. Now own what you wanted, but were too lazy or too stupid to learn about.

J. Moore

So what?! The majority of the folks paying the 'penalty' will be paying it from the EIC or 'refund' amount from taxes they never paid anyway. It's STILL redistribution from the paying class to the moocher class back to the gov.

Jay Loveless

Money is real when it is backed by a substance having intrinsic value, as ours used to be; first with gold, then after 1933 with silver. I'm old enough, at 63 to remember being paid in Silver Certificates. It was only when we dropped that backing and went to "Federal Reserve Notes" that our money became trash.


How Obamacare Screwed Up 800,000 Tax Returns

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Posted by Ryan Ellis on Friday, February 20th, 2015, 1:00 PM PERMALINK


The Associated Press is reporting today that an "erroneous" glitch in Obamacare tax forms is causing filing season to come to a halt for 800,000 taxpayers.  Tens of thousands of these families have actually already filed and will need to file amended returns redundantly.

Americans for Tax Reform can shed some light on what the "erroneous" problem is.  The affected form for Healthcare.gov enrollees is known as an IRS Form 1095-A.  It documents health insurance coverage obtained through the federal healthcare.gov exchange.  It reports premiums charged by month.  It is supposed to also report the amount of a tax credit advanced from the IRS to the covered family's insurance company.  Finally, a middle column is supposed to say what the average premium amount was for the second lowest-cost silver plan (the poetically-named "SLCSP").

All three inputs--monthly premium cost of the health insurance plan, the SLCSP, and the advanced premium tax credit amount--are vital to calculating the accurate tax credit a taxpayer is entitled to under the Obamacare law.  Without even one of these inputs, the calculation is thrown off.  It would therefore also be impossible to determine whether the advanced tax credit was too generous (in which case the taxpayer may owe the IRS money), or too stingy (in which case the taxpayer claims the remaining credit amount on his 1040 filing).

ATR has obtained two 1095-A tax forms issued to healthcare.gov customers.  In each case, the silver plan column each month had an entry of "$0.00."  No data was provided.  It was impossible for these taxpayers to even make a guess of what their tax credit for the year was supposed to be, or if they were due a tax credit at all.  

It is ATR's belief that these 800,000 taxpayers were similarly issued 1095-As without the absolutely vital SLCSP numbers.  Until those numbers are provided by the dysfunctional healthcare.gov bureaucracy, it will not be possible for these taxpayers to complete their income tax filing accurately. They will not be able to determine if any advanced tax credits they received were too generous or too stingy.  

800,000 families are literally caught in limbo until healthcare.gov gets its act together.

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ATR Supports “Health Freedom for Seniors” Act


Posted by Ryan Ellis on Tuesday, February 17th, 2015, 12:37 PM PERMALINK


Last week, H.R. 975 the “Health Freedom for Seniors Act” was introduced in the U.S. House of Representatives. This legislation will reform health savings accounts (HSA) to empower seniors to save money for their own health care. ATR endorses this legislation and urges members of Congress to support this bill.

H.R. 975, introduced by Representative Bill Huizenga (R- Mich.) will help ensure seniors are able to use their hard earned savings for retirement.  Under current law, Americans who reach age 70 and one-half are required to begin making “required minimum distributions” (RMDs) from IRAs and 401(k) plans. The accounts must be drawn down, regardless of whether the taxpayer has other funds with which to support themselves.

H.R. 975 would put a stop to this absurd law by permitting seniors a tax-free rollover of their RMD into a HSA.  Because HSA dollars have no required distributions, this allows savings to be preserved for things like long-term care insurance, Medicare premiums, and other health needs as one gets further into retirement. 

With healthcare costs spiraling out of control, seniors need this common sense reform now more than ever to help pay for their healthcare expenses. ATR supports this legislation and urges Congress to bring this legislation forward for a vote.

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ATR Supports Tax Relief for Working Parents


Posted by Ryan Ellis on Tuesday, February 10th, 2015, 1:36 PM PERMALINK


Last week, H.R. 750, the “Family Care Savings Act” was introduced in the U.S. House of Representatives. This legislation will make improvements to dependent care flexible spending accounts (FSAs) and help Americans manage the rising costs of raising a family. ATR endorses this bill and urges members of the House to support this legislation.

H.R. 750, introduced by Representative Patrick McHenry (R- N.C.) and Representative Grace Meng (D- N.Y.) raises the cap on dependent care FSAs from $5,000 to $10,000 and indexes it to inflation after the first year of enactment. These FSAs allow employees to save part of their pre-tax earnings for specific expenses including medical and dependent care. Dependent care FSAs can be used for children under the age of 13, anyone who is physically or mentally unable to care for themselves, or any adult whose care is predominantly paid for by another person.

This legislation will provide a much needed update by increasing the current cap which was set almost 30 years ago when dependent care FSAs were first created in 1986. H.R. 750 will improve dependent care FSAs and help families plan and budget for the expenses of caring for children, disabled spouses, or elderly parents.

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ATR Supports Permanent Small Business Expensing Bill


Posted by Ryan Ellis on Monday, February 9th, 2015, 10:33 AM PERMALINK


This week, the U.S. House of Representatives will vote on H.R. 636, “America’s Small Business Tax Relief Act.” Small businesses are the backbone of the economy and a pathway by which millions achieve the American dream. H.R. 636 will provide important tax relief to small business across the nation. ATR supports this legislation and urges members to vote yes.

H.R. 636, sponsored by Representative Patrick J. Tiberi (R-Ohio) expands and updates Section 179 of the tax code to provide small business owners, farmers and ranchers with regulatory relief that will help reduce the cost of capital and allow them to more easily invest their hard-earned resources back into their businesses.

Specifically, this legislation will make permanent a tax provision allowing small employers to expense up to $500,000 of equipment purchases per year. If current law is not changed, small businesses can only expense $25,000 of purchases for things like computers, office furniture, manufacturing equipment, etc.  The rest must be subject to a slow, multi-year deduction process known as "depreciation."

For many Americans, starting a business is the reward for years of hard work, good decisions and innovative ideas. Each year, millions of Americans across the country invest countless hours, take out loans and enlist the help of friends and family in order to start their own business. This legislation will provide these small business owners with much needed tax relief that will help put them on the pathway to success. 

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Eagle 1

If you own a business and buy a piece of capital, even a car or truck, it is an expense and should not be taxable. Does not matter if the company has 1 or 10000 employees. The law should be evenly applied. You obviously do not understand these things. Learn a little about accounting before you advertise your stupidity for all to see.

JD

Most Americans have to buy a car to go to work, We do not get to write it off...For some reason Grover thinks that whatever a business person needs the tax payers should pay for.......what a joke!!!


ATR Supports Senate GOP Balanced Budget Amendment


Posted by Ryan Ellis on Thursday, February 5th, 2015, 3:23 PM PERMALINK


This week, a Balanced Budget Amendment to the Constitution was introduced in the U.S. Senate. This Balanced Budget Amendment proposal is pro-taxpayer and will help put America on a path towards fiscal responsibility. ATR urges all Senators and Congressmen to support the BBA.

S.J. Res 6 has been cosponsored by all 54 Republican Senators. This common sense proposal will help direct members of Congress towards enacting fiscally responsible policies.

This amendment limits spending to 18 percent of Gross Domestic Product (GDP). Capping spending at 18 percent requires government to live within its means. This strict spending cap is a significant step towards reining in the size of government and will help protect taxpayers from reckless and unnecessary government spending.

Most importantly, this amendment will protect taxpayers from unnecessary and burdensome taxes and instead requires Congress to balance the budget in a responsible way. S.J. Res 6 requires a two-thirds supermajority of members of each House of Congress in order to enact any new tax. However, 48 members of the Senate and 221 members of the House have signed the Taxpayer Protection Pledge, promising their constituents they will not support any proposal that contains a net tax increase. Therefore, the BBA will prevent Congress from balancing the budget using tax hikes and will instead force politicians to address Washington’s rampant spending problem by reducing spending.

S.J. Res 6 will rein in out of control government spending, protect taxpayers and force Congress to live within their means. ATR encourages members of the Senate and House to support the BBA.

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IRS to Steal Tom Brady's Superbowl MVP Truck

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Posted by Ryan Ellis on Wednesday, February 4th, 2015, 12:36 PM PERMALINK


The world champion New England Patriots will celebrate with the city of Boston today in the now customary duck boat parade downtown.  It would be fitting if an IRS agent was waiting for quarterback Tom Brady at the end of the route.

Specifically, he might want to talk about Brady’s new truck.  You know, the 2015 Chevy Colorado he won as Super Bowl MVP. The same truck Brady wants to hand over to Patriots rookie cornerback Malcolm Butler, who won the Super Bowl on a last second interception.

The truck is considered a taxable prize under the Internal Revenue Code, section 74.  It’s taxed at Tom Brady’s marginal income tax rate of 39.6 percent (plus state income tax, but I’ll leave the focus on federal here).

According to TrueCar.com, the fair market value of a 2015 Chevy Colorado is in the neighborhood of $34,000.  This is likely an understatement, since it includes none of the options that Chevy no doubt added to the vehicle.

So Tom Brady will pay ($34,000 x 39.6 percent) in taxes, or $13,500 in income tax on this prize.

But the pain won’t stop there for the greatest quarterback in NFL history.

Don’t Forget About the Gift Tax, Tommy

According to ESPN, Brady has decided to gift the truck to Patriots rookie cornerback Malcolm Butler, who made the game-clinching interception on Sunday night.  This is not a taxable event at all for Butler–gifts are never taxed to the recipient.

Brady is not so lucky.  He’s going to have to pay gift tax on this transaction.  The tax code only allows you to give $14,000 tax free from any one person to any one person before assessing a donor level tax on the gift.

Assuming this will be Brady’s only gift to Butler this year, the transaction sets up a taxable gift for Brady of $20,000 (the $34,000 value of the truck minus the $14,000 gift tax exclusion).  Assuming Brady has made at least $1 million of taxable gifts up to this point in his life (a safe bet), he will owe a 40 percent gift tax on this $20,000 taxable gift.

That’s a $5000 gift tax on top of a $13,500 income tax on the truck, for a combined federal tax hit of $18,500.

That’s over half the value of the truck itself.

What About His Game Check?

Note that the above analysis is only for the federal income tax owed and gift taxes due on the MVP prize.  What about the paycheck Brady collected for winning the Super Bowl?

According to CNBC, the NFL pays a player on a Super Bowl winning team a salary of $97,000 for the game.  Brady doesn’t appear to have any Patriots team bonuses for the game, so this is likely the amount we’re dealing with.

Brady will face income tax at the top rate of 39.6 percent.  In addition, since this is a wage, he will also owe the top Medicare tax of 3.8 percent, half of which will be picked up by the NFL.  Put those together, and Brady will pay $42,000 in federal taxes on the game.

He didn’t get hit that hard by the Legion of Boom Seattle defense, but the IRS is a much bigger foe.

Photo Credit: 
Keith Allison

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marrmae1

BS! Doesn't matter how much he earned, he's the one who earned it, and you and your ilk have no claim to it! Period!

Phitness

Just to be clear: The guy makes $925,000 PER GAME this year, was paid $97,000 just for playing in the Super Bowl (collectively, playoffs paid out $165,000 for each player on winning team), and has a contract salary of $14.800,000 forTHIS YEAR alone....and you're complaining (on his behalf, mind you) about paying $18,500 on a FREE GIFT of $35,000? If Brady was living on food stamps and unemployed I'd hear your argument, but he makes millions, isn't a "job creator" and has never once complained himself about his wealth being taxed (you're doing it for him...which is odd).

Sorry, but where I come from, sharing a little bit of your free lunch while you're at a buffet isn't worth whining about.

Trialkat

Why bother to play hard and win. The more you win the more you lose! End the income tax, repeal the 16th Amendment, replace it all with a simple, visible retail sales tax as in H.R. 25/S. 155 and make winning count again!


ATR Supports Legislation to Prevent the IRS from Targeting Taxpayers Based on Political Ideology


Posted by Ryan Ellis on Tuesday, February 3rd, 2015, 12:03 PM PERMALINK


ATR supports several bills that will protect taxpayers from being targeted by the IRS because of their political beliefs or affiliation. We urge members of the U.S. House of Representatives and U.S. Senate to support this legislation.

The IRS has the power to designate groups as tax-exempt social welfare organizations provided they are primarily engaged in activities to promote the common good and general welfare of society. However their ability to impartially perform this responsibility has been called into question since it was revealed that they had inappropriately targeted conservative social welfare groups for scrutiny.  

S. 273, sponsored by Senator Ted Cruz (R-Texas) and H.R. 599, sponsored by Representative Paul Ryan (R-Wis.) would make it a criminal offense for any IRS employee to willfully discriminate against groups based on their political beliefs or any policy statements made.

S.283, sponsored by Senator Jeff Flake (R-Ariz.) would roll back the IRS standards of definitions for “social welfare organizations” to January 1, 2010. The bill will also suspend any IRS rulemaking in this area until 2017.

These bills will help protect taxpayers from future IRS overreach. In the wake of the IRS targeting conservative groups based solely on their ideology, this legislation is needed now more than ever.

 

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Employee

Please read the following 503(c) rules and tell me how many political groups period fall in this category? Plus what social benefit are they actually providing when they can't even do their jobs on the hill and pass bills? Why does the political organization need to be exempt? I'm sure like all the other laws that are implemented for their benefit this tax exempt status will allow them to not pay taxes anywhere, whether personal, private or for their supposed non-exempt entity. So when questions are asked by the IRS they are just doing their jobs to make this determination.

To be tax-exempt under section 501(c)(3) of the Internal Revenue Code, an organization must be organized and operated exclusively for exempt purposes set forth in section 501(c)(3), and none of its earnings may inure
to any private shareholder or individual. In addition, it may not be an action
organization, i.e., it may not attempt to influence legislation as a substantial part of its activities and it may not participate in any campaign activity for or against political candidates.

Section 501(c)(3) organizations are restricted in how much political and
legislative (lobbying) activities they may conduct. For a detailed
discussion, see Political and Lobbying Activities. For more information about lobbying activities by charities, see the article Lobbying Issues; for more
information about political activities of charities, see the FY-2002 CPE topic
Election Year Issues.


The Obama Budget's Double Taxation of U.S. Employers

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Posted by Ryan Ellis on Tuesday, February 3rd, 2015, 9:35 AM PERMALINK


President Obama released his FY 2016 budget yesterday. It contains dozens of tax increases that go on for page after page. Buried in there is a series of tax increases on U.S. employers who also do business abroad. Because the U.S. has a "worldwide" tax regime, any further U.S. taxation of overseas income represents a double tax on that income. By definition, these overseas profits have already faced taxation in the country where they were earned. The United States should instead move to a "territorial" tax system, where the IRS only taxes profits earned inside our borders. That's what the rest of the developed world does, and it's time to modernize the code to reflect current best practices.

Unfortunately, the Obama budget moves in the wrong direction in three key ways.

Immediate 14 percent tax on overseas earnings.  U.S. companies who earn money overseas have a problem. They have already paid taxes on these profits in whatever country they earned the money in. But if they try to bring their after-tax profits back to the United States, they face a double tax from the IRS. They have to pay the difference between the U.S. corporate income tax rate (which is over 39 percent when states are--properly--included), and the rate they already paid overseas (the OECD average is under 25 percent).

The Obama budget makes this problem even worse by slapping an immediate 14 percent tax (close to 20 percent when states are included) on all after-tax earnings overseas--whether the money ever comes back to the United States or not.

A much saner strategy would be to make this decision optional and beneficial for companies.  Back in 2005, companies could voluntarily bring back overseas after-tax corporate earnings with a small double tax of 5.25 percent.  When given this choice, over $300 billion came back that year alone.  In the absence of a territorial system, which would have no double taxation at all, U.S. policymakers should give strong consideration to another round of repatriation.

A new global minimum tax of 19 percent. Another provision in the Obama budget would say that companies have to pay a tax rate of 19 percent (really 24 percent when states are included) on their global profits.  This means that companies who do business in countries with the good sense to have low, internationally-competitive corporate income tax rates will be punished. This is a clear case of rich, developed, and bloated countries picking on developing countries in Eastern Europe and elsewhere who are trying to attract capital. American companies are merely being used as a football here.

A real territorial system would not care what the tax rate overseas is, since it would not concern itself with overseas profits. Trying to slap global minimum taxes around the world is a sure recipe for forcing companies out of the United States entirely.  Speaking of that...

New restriction on "corporate inversions."​ President Obama and Congressional Democrats like to rail against "corporate inversions" (when a U.S. company is bought out by a foreign company) in the same way an angry drunk objects to the bruises on his wife's face.  We have the worst corporate income tax system in the world.  We impose the highest marginal income tax rate in the world.  We force our companies to live under a totally insane worldwide tax regime which exposes their profits to all sorts of international double taxation.  We force companies to slowly deduct investments and double tax their equity, yet they can write off debt interest immediately.   It's the opposite of what you want to do if you want to attract jobs and capital to the United States.

​Yet the Obama budget makes it worse.  It changes tax rules so that if 50 percent or more of the shareholders in the acquired company were in the old company, the new business is treated as if it were domestic.  To translate that into English, it exposes these companies to full international double taxation, and potentially causes massive "exit taxes" on companies just trying to comply with a very punitive tax system.

The solution for "corporate inversions" is simple--fix the U.S. tax system so that we're inviting capital and jobs in, rather than pushing them out the door.

See also: 
Obama Budget Creates Second Death Tax

Obama Budget: Highest Cap Gains Tax Since 1997
 

Photo Credit: 
Vivi Barros

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John (magnum)

"The Obama Budget's Double Taxation of U.S. Employers"

Odumbo and the dem-wit party are JOB KILLERS with taxation and excess regulations.

Fewer and fewer makers paying for the Odumbo takers.

This is just a continued attack on the middle class since companys do not actually pay taxes, but passes them along to consumers !

David Addams

Corporations will take very predictable actions in order to avoid these taxes.

The most obvious being to set up a holding corporation in another country and have that company own the corporations in the various countries in which they do business.

The U.S. company would be a subsidiary and would have no ownership rights in the other companies and therefore no claim to those companies' profits.

ToddTexas

The reality is this...businesses don't pay taxes...the people who buy products or use a service from a business pay its taxes. Anytime any tax is levied, we the people pay it...and that's how we should talk about it too.


ATR Supports Bill to Repeal and Replace Obamacare


Posted by Ryan Ellis on Monday, February 2nd, 2015, 4:37 PM PERMALINK


This week, the U.S. House of Representatives will vote on H.R. 596, legislation to repeal and replace Obamacare. ATR supports this bill and urges members to vote yes.

The legislation, introduced by Representative Bradley Byrne (R-Ala.​), will repeal Obamacare 180 days after the law is enacted to allow has time to enact free market reforms that provide American families with lower medical costs, stronger care and protect the doctor-patient relationship.

Put simply, Obamacare has not worked how its supporters have hoped. It has raised the cost of healthcare for millions of Americans, cost countless more their jobs and created thousands of complex and unnecessary regulations. Obamacare also contains dozens of tax increases so repealing the law will reduce the taxes of American families.

Americans deserve a healthcare system that provides them with affordable and efficient care, not one that is overly complex and leads to uncertainty. This legislation will help give Americans the healthcare system that they need and deserve.

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rhzszm

Repeal. Impeach. Lock up in prison.

How did American turn into a country where the "middle class" is dependent on government programs?

fr0thing

Repeal Obamacare now!

Marcus Landon

The "free market" is a God-awful predicate for an effective health care system. Health care SHOULD be a basic civil right enjoyed by every citizen. We should be able find some way to make it affordable, and eliminate the MANY BILLIONS wasted on insurance carriers who do nothing to contribute to better health care. Medical school should be 100% free (paid for by government) for the BEST & BRIGHTEST. Doctors should enjoy special perks, but no M.D. should make more than $1 million a year. If your prime focus is financial reward, do not become a doctor!


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