Category

General Articles

Michael Davis
In General Articles

Medicare Part B Enrollment

Author: Sherri VanArendonk

Enrollment in Medicare Part B can be difficult and lead to large fines if done at the wrong time. For example, if an individual fails to enroll, he or she must pay a late enrollment penalty (LEP) of 10% his or her monthly premium for life. James Sullivan, in an article published in the Journal of Accountancy, discusses how to maneuver the Part B enrollment process.

What does Medicare Part B cover?

Medicare Part B covers outpatient medical care such as: medical services, tests, and supplies used outside a hospital or skilled nursing care facility.

The 3 Enrollment Periods

Enrollment Period When Used Period
Initial Enrollment Period (IEP) When eligible individual turns 65. Seven months long beginning three full months before the month in which an individual turns age 65. It ends three full months after the month of the individual’s 65th birthday.
Special Enrollment Period (SEP) Any time after the IEP when an eligible individual loses coverage in an employer-provided group health plan. Flexible: It can be used any time an eligible individual decides to terminate coverage in an employer-provided group health plan and his or her IEP is not available. Medicare Part B coverage begins the month following enrollment. If coverage is lost due to termination of employment or plan termination, the enrollment period is eight months.
General Enrollment Period (GEP) When the IEP or the SEP is not available. Jan. 1 through March 31 of each year. Medicare participation does not begin until July 1.

Source: Medicare General Information, Eligibility, and Entitlement Manual, Centers for Medicare & Medicaid Services.

The IEP leads to no penalty, but may lead to gaps in coverage. The SEP can only be used by someone who is losing employer-provided coverage. The GEP is used as a last resort and may lead to gaps in coverage and late penalties.

To read the full referenced article, click here. For assistance in navigating the Medicare Part B enrollment process, please contact Sherri VanArendonk at (231) 726-5898 or svanarendonk@brickleydelong.com.

Learn more about our individual taxation services.

Brian McFarren
In General Articles

Identity Theft Progress by IRS

Over the recent years, there has been an increase in stolen Social Security numbers and fraudulent tax returns being filed. The Internal Revenue Service has continued efforts in combating tax fraud. They recently announced a collaborative effort of 34 state revenue departments and 20 tax industry members to put strong new safe guards in place for the 2016 tax season.

Sally Schreiber, in a recent article published in the Journal of Accountancy, reports on the announcement.

The effort, known as the Security Summit, involved the IRS, tax preparation firms, tax software firms, and state tax administrators. Three working groups are focusing on three key issues of authentication, information sharing, and cyber security. The effort also includes verifying identities in tax software, adding security questions, increasing password requirements, and timed locked outs.

For more information on this announcement, please visit the referenced article, or contact Brian McFarren at (231) 726-5815 or bmcfarren@brickleydelong.com.

 

Learn more about our individual tax services.

Michael Davis
In General Articles

Minimum Wage Increase – January 1, 2016

On January 1, 2016, there will be a minimum wage increase in Michigan. The increase is part of the Workforce Opportunity Wage Act of 2014.

Effective January 1, 2016:

  • Minimum wage in Michigan will increase from $8.15 to $8.50 an hour.
  • Tipped employees’ wages will increase from $3.10 to $3.23.
  • Minors (age 16-17) rate stays the same at $7.25, or 85% of the minimum hourly wage.

The next increases will happen January 1, 2017 to $8.90 and January 1, 2018 to $9.25.

For more information on the Workforce Opportunity Wage Act, click here. For assistance in your business’s payroll or bookkeeping services, contact Terry Maycroft at (231) 726-5825 or tmaycroft@brickleydelong.com.

 

Learn more about our payroll and accounting services.

Michael Davis
In General Articles

Muskegon Promise

In an October article published in MiBiz, reporter John Wiegand discusses a new scholarship fund for Muskegon County high school seniors that pays for two years of community college.

The goals of the Muskegon Area Promise are to increase the area’s educated workforce, develop talent, and attract new families. The program emulates a similar program in Kalamazoo which has seen an 11% return on investment since 2005.

According to the article, once fully funded, students who graduate from 12 Muskegon County school districts, and maintain a 3.5 GPA will have the ability to use the Promise to cover 100% of tuition and fees for an associate degree or equivalent technical program at Muskegon Community College or Baker College of Muskegon. Students can also choose to take 62 credits of general education, and then transfer to a four-year university.

This scholarship fund will relieve or reduce the burden of paying for college education that many Muskegon parents and students face. Undoubtedly this will lead to more young adults in the area receiving higher education, and an improving workforce.

To read the full article about the Muskegon Promise, click here.

Patrick Mutchler
In General Articles

The Unique Need of Business Owners

Peter Klein, in a recent article in the Financial Advisor discusses how business owners face distinctive challenges in relation to operating their business and personal expenses.

Seven challenges he addresses are:

  • Business owners underestimate their personal exposure to business risk. The risks of business ownership are ever-changing. Owners need to make it a priority to protect their personal assets, especially when dealing with bank loans.
  • Business owners double down on market risk.
    Business owners tend to reinvest their money in what they know, rather than countercyclical assets.
  • Business owners loot their retirement funds to save their businesses.
    Owners tend to be too hopeful about an economic turnaround. And, if their business is failing, using a retirement fund to save the business makes little to no sense, especially when the fund has special protection.
  • Business owners focus on control.
    The tendency to not want to turn business control over to an expert happens many times with business owners. However, turning over control allows for an experienced professional to help overcome barriers the business is facing.
  • Business owners often fail to consult with financial professionals to gain a broader perspective.
    Owners may not be aware of market and economy changes like a financial professional.
  • Business owners often do not regard taxes, succession and estate planning, which are especially important issues to Baby Boomers.
    Generational transfers are on the rise, and it is important for owners to be aware of tax, succession, and estate planning challenges.
  • Business owners often lack awareness about special benefits.
    Business owners and self-employed individuals have tax-deferred savings opportunities that they may be unaware of.

For more information on these challenges, please read the full article. For assistance in overcoming some of these challenges, please contact Patrick Mutchler at (231) 726-5870 or pmutchler@brickleydelong.com.

Learn more about our closely-held business services.

Patrick Mutchler
In General Articles

File and Suspend Social Security Strategy Eliminated

President Obama recently signed a budget deal that eliminated the “file-and-suspend” strategy used by many married couples.

What is the file and suspend strategy?

This strategy is when a spouse applies for Social Security retirement benefits and then suspends payment in order to trigger spousal benefits. While spousal benefits are being collected, the spouse that applied and suspended Social Security will have their own retirement benefits continue to grow by 8% a year until he or she reaches age 70.

This strategy can lead to a significant increase in Social Security retirement income for couples. There was no warning to the end of this; rather, the Social Security rule changes were slipped into a backroom budget compromise.

What are the effects?

Those who are already 66, or will turn 66 in the next six months, are still able to suspend-and-file under the old rules.

Those who turn 66 after May 1, 2016, will still be able to file-and-suspend, but their spouses and dependent children will not be able to collect benefits unless the primary beneficiary is also collecting benefits.

 

For more information or assistance on this new law, please visit this article or contact Patrick Mutchler at (616) 608-8540 or pmutchler@brickleydelong.com.

Learn more about our tax services here.

Patrick Mutchler
In General Articles

IRS Raises Tangible Property Threshold

On November 24, The Internal Revenue Service announced an increase in the de minmis safe harbor limit from $500 to $2500.

What is the de minimis safe harbor?

The de minimis safe harbor rule allows taxpayers to deduct eligible expenditures in the year they were paid or incurred as supplies or repairs, which would otherwise have to be capitalized.

Impact of these changes

This increased threshold will simplify the paperwork and recordkeeping requirements for many small businesses. According to the IRS, they received over 150 requests from businesses and their representatives requesting an increase in the threshold because the $500 limit was too low and provided no relief to the administrative burden of managing capital assets.

This change affects businesses that do not maintain an applicable financial statement (AFS). For businesses with an AFS, the threshold remains at $5000.

The new $2500 threshold will be effective January 1, 2016, although there may be opportunities to apply it sooner.

For more information on this threshold increase, please read the full IRS announcement, or contact Patrick Mutchler at pmutchler@brickleydelong.com or (616) 608-8540.

Read more about our business and individual taxation services here.

Patrick Mutchler
In General Articles

New Tax Return Due Date Changes and their Importance

Eileen Reichenberg Sherr, in an article in the Journal of Accountancy, discussed how this past summer, Congress and President Obama signed legislation that modified the due dates for several tax returns.

The AICPA has been encouraging these changes since 2006, mainly due to flowthrough entities’ Schedules K-1, Partner’s [or shareholder’s] Share of Income, Deductions, Credits, etc. containing tax return information provided by partnerships and S corporations arriving late. Late K-1s make it difficult to file an accurate return on time, and many practitioners are forced to use estimates to file extended returns timely.

This will create a more logical flow for tax preparers and clients and ease the stress of those waiting for their K-1s to arrive.

To view a chart of the new due dates, click here.

For more information on the new due dates, please read the full referenced article or contact Patrick Mutchler at (231) 726-5870 or pmutchler@brickleydelong.com.

Learn about our business taxation services here.

Brenda Jacobs
In Brenda Jacobs, General Articles

Required Minimum Distributions before Year-end to Avoid Penalty

A recent Thomson Reuters article informs that as the end of the year approaches, it is important for older taxpayers to pay attention to their required minimum distributions (RMDs) for the year. A RMD is the minimum amount one must withdraw from his or her retirement plans account each year.

When Required Minimum Distributions Apply:

  • For traditional IRAs, taxpayers must begin taking RMDs by April 1following the year they reach 70½.
  • For qualified plans such as a 401(k), taxpayers must begin taking RMDs by 1) April 1 following the year they reach 70½, or 2) when the taxpayer retires (if he or she is a non 5% owner in the business).
  • For qualified plans such as a 401(k), taxpayers must begin taking RMDs by April 1following the year they reach 70½ if a taxpayer is a 5% or more owner in the business.

Failure to Withdraw

Lack of attention to your RMD can lead to stiff penalties. For example, not withdrawing your annual RMD for the necessary minimum amount could result in exposure to a tax penalty of 50% of the amount not withdrawn.

For more information on required minimum distributions, please read the full referenced article, or visit Retirement Plans on the IRS website. For assistance in anticipating your required minimum distribution, contact Brenda Jacobs at (616) 608-8530 or bjacobs@brickleydelong.com.

Learn more about our individual taxation services here.

Brenda Jacobs
In Brenda Jacobs, General Articles

IRS Urges People to Take Advantage of Voluntary Disclosure Programs

A recent IRS announcement indicated the importance of taxpayers with undisclosed offshore accounts to come into full compliance with their federal tax obligations. Automatic reporting has made it less likely that financial accounts will go unnoticed by the IRS; so, it is even more imperative that taxpayer’s comply.

The Offshore Voluntary Disclosure Program (OVDP) and the streamlined procedures were designed to allow taxpayers to correct prior omissions and alleviate penalties of non-compliance. In addition, there are also procedures available to taxpayers who have paid their income taxes but omitted certain information on their returns.

The announcement stated that, since the OVDP began in 2009, there have been over 54,000 disclosures. And, the streamlined procedures, which began in 2012, have brought over 30,000 taxpayers to compliance.

For more information on offshore accounts compliance, and voluntary disclosure programs, please visit the referenced article, or contact Brenda Jacobs at bjacobs@brickleydelong.com or (616) 608-8530.