Most entrepreneurs would rather have root canal surgery without anesthesia than go through the nightmare that is tax return preparation.
~ Nina Kaufman. Entrepreneur.com 2-16-10
Approximately 800,000 taxpayers who received health care coverage through the federal insurance marketplace Healthcare.gov were sent the wrong information on their Form 1095-A and are being urged to wait to file their taxes until the first week of March when they receive the correct information from the federal government.
“About 20 percent of the tax filers who had Federally-facilitated Marketplace coverage in 2014 and used tax credits to lower their premium cost —about 800,000 (< 1% of total tax filers) —will soon receive an updated Form 1095-A because the original version they were issued listed an incorrect benchmark plan premium amount,” said a blog post on the Web site of the Centers for Medicare and Medicaid Services. “Based upon preliminary estimates, we understand that approximately 90-95% of these tax filers haven’t filed their tax return yet. We are advising them to wait until the first week of March when they receive their new form or go online for correct information before filing. For those who have filed their taxes—approximately 50,000 (< 0.05% of total tax filers) —the Treasury Department will provide additional information soon.”
CMS noted that taxpayers who received health coverage under the Affordable Care Act should have received a statement in the mail in February from the health insurance marketplace called a Form 1095-A. The statement includes important information needed to complete and file their tax returns. One piece of information included on the 1095-A is the premium amount for the “second lowest cost Silver plan” in the taxpayer’s area. This premium amount represents the benchmark plan used to determine the amount of premium tax credit they were eligible to receive. Unfortunately that information was calculated incorrectly for many taxpayers, although CMS stressed that it won’t be an issue for the majority who received health coverage through Healthcare.gov.
Here are eight things you should know about deducting medical expenses:
Millions of workers who earned $52,427 or less during 2014 may qualify for the Earned Income Tax Credit (EITC) for the first time this tax season. The EITC could be as much as $6,000. However, you must file a return to get this credit.
Keep in mind, the EITC is a refundable credit. This means, even if you had nothing withheld from your pay and have no tax liability, you can get a refund. In addition, if you're single and have no children, you may qualify for the EITC.
“About four out of five eligible workers and families get the credit they earned. That leaves millions missing the EITC every year," said IRS Commissioner John Koskinen. Last year, almost 28 million eligible workers and families received $66 billion total in EITC, with an average EITC amount of $2,400.
Because so many taxpayers are missing out on this credit, this tax season the Internal Revenue Service is partnering with community-based organizations across the country to promote Earned Income Tax Credit Awareness Day, an effort to alert millions of low and moderate-income workers who may be missing out on a significant tax credit that can be as much as $6,000. All across the United States, local officials and community organizations are holding events highlighting this key benefit.
The amount of EITC varies depending on income, family size and filing status. Those who work for someone else or those who run a business or farm and who earned $52,427 or less during 2014 could receive larger refunds if they qualify for the EITC. Even people without children could get up to $496 in EITC., There is a maximum credit of $6,143 for those with three or more qualifying children.
The following information applies to both scenarios:
Result 1: Non-refundable tax credit
Result 2: Refundable tax credit:
Remember, you must file a return to get the EITC. File now with TurboTax Federal Free Edition + Get your maximum refund as fast as possible with e-file and direct deposit. Don't assume you're not eligible for this credit. You could be one of the millions missing out!
Several important tax changes went into affect in 2014. Depending on your income, age, marital status, or whether you operate a business, you could be affected.
Tips and Tid Bits
During fiscal year 2013, the IRS collected almost $2.9 trillion in federal revenue and processed 240 million returns of which 151 million were filed electronically. Out of the 146 million individual income tax returns filed, almost 83 percent were e-filed. More than 118 million individual income tax return filers received a tax refund, which totaled almost $312.8 billion. On average, the IRS spent 41 cents to collect $100 in tax revenue during fiscal year 2013.
The IRS examined just under one percent of all tax returns filed and about one percent of all individual income tax returns during fiscal year 2013. Of the 1.4 million individual tax returns examined, over 39,000 resulted in additional refunds.
Seven states do not have a personal income tax. They are: Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming. New Hampshire and Tennessee do not tax wages. They tax investment income from stocks and bonds.
The IRS uses occupational codes to measure typical amounts of travel by profession. A tax return showing 20 percent or more above the norm might get a second look? Here are a few other red flags that can trigger an IRS audit .
Silly as it may seem, if you robbed a bank dung 2013, you had taxable income. Intentionally not reporting ill-gotten gains is considered tax evasion. The IRS doesn't care how we "earn" our loot as long as they get their cut, from a tax compliance standpoint of course. So, if you're selling drugs or scamming investors and not reporting the income, some day you could find yourself in the same predicament that Al Capone found himself in! Here are some of the top tax myths.