Anderson ZurMuehlen Blog

Start Planning Now If You’d Like To Deduct Medical Expenses

Medical expenses that aren’t reimbursable by insurance or paid through a tax-advantaged account (such as a Health Savings Account or Flexible Spending Account) may be deductible — but only to the extent that they exceed 10% of your adjusted gross income.

Before 2013, the floor was only 7.5% for regular tax purposes. (Taxpayers age 65 and older can still enjoy that 7.5% floor through 2016. The floor for AMT purposes, however, is 10% for all taxpayers, the same as it was before 2013.)

By “bunching” nonurgent medical procedures and other controllable expenses into alternating years, you may increase your ability to exceed the new 10% floor. Controllable expenses might include prescription drugs, eyeglasses and contact lenses, hearing aids, dental work, and elective surgery.

If it’s looking like you’re close to exceeding the floor this year, consider accelerating controllable expenses into this year. But if you’re far from exceeding it, to the extent possible (without harming your health), you might want to put off medical expenses until next year, in case you have enough expenses in 2014 to exceed the floor.

Have questions about the 10% floor or exactly what expenses are deductible? Ask us!

Copyright ©Thomson Reuters

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IRS makes more same-sex couples eligible for federal tax treatment as a married couple

In response to the U.S. Supreme Court’s June decision regarding same-sex marriage, the IRS recently clarified that married same-sex couples will be treated as married for all federal tax provisions in which marriage is a factor, such as filing status, dependent exemptions and child credits, and gift and estate tax breaks.

Significantly, the Supreme Court decision extended federal marriage-related benefits only to same-sex married couples in states recognizing their union; the IRS ruling expands eligibility for marriage-related federal tax benefits to same-sex married couples in all states, as long as they were married in a jurisdiction recognizing their marriage.

In light of the ruling, same-sex married couples should:

• Evaluate how changing their filing status to “married” will affect their 2013 tax liability, and factor that into their year end tax planning

• Determine whether they can receive a tax refund for previous years if they file amended returns as a married couple

• Decide whether any changes to their estate plans are warranted to take advantage of the federal gift and estate tax benefits available to married couples

These are only some of the tax areas requiring attention. Please contact us for more information on the impact of the IRS ruling.

Copyright © Thomson Reuters

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Affordable Care Act Update: Deadline Looming On Insurance Marketplace Availability

By Mike Combo, CPA, Shareholder

Notice of “Insurance Marketplace Availability” deadline is looming. The Affordable Care Act requirement obligates businesses to distribute these notices to employees by October 1, 2013. Employees hired after October 1, 2013 must receive the notices within 15 days of the date of hire. Employers, regardless of whether they provide health coverage, are required to provide a notice if they have revenue of at least $500,000 and have one employee.

The notice needs to include information that:

  • Inform employees about the existence of the Marketplace
  • Notify employees whether their plan meets the minimum essential coverage and if it doesn’t that the employee is eligible for a premium tax credit
  • If the employee purchases a qualified plan through the Marketplace, the employee may lose the employer contribution to any health plan offered by the employer and a portion or all of the company’s contributions to the health plan may be excluded from taxable income.

The Department of Labor has two standard notices employers can use. One version is for employers who offer health coverage and one for employers who do not. Businesses may use the DOL’s samples or create their own as long as it meets the requirements listed above. For more information visit, www.dol.gov/ebsa/healthreform.

If you have any questions regarding this requirement, please call 406-721-7800 or email Mike Combo.

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A Closer Look at Home Office Deductions

Home office deductions can save taxpayers a bundle, if they meet the tax law qualifications. However, claiming expenses for a home office has long been a red flag for an IRS audit since many people don’t qualify. But don’t be afraid to take a home office deduction if you’re entitled to it. You just need to pay close attention to the rules to ensure that you’re eligible — and that your recordkeeping is complete.

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