by | ARTICLES, BLOG, FREEDOM, OBAMA, OBAMACARE, POLITICS, TAX TIPS, TAXES
If you are one of the millions of Americans who declined health insurance and decided to pay the fee tax fine penalty, be aware that it will be a part of your 2014 tax calculations — and beyond.
The penalty is officially called the “shared responsibility payment”. This is on U.S. Individual Income Tax Return for 2014, Form 1040, line 61; OR Form 1040A, line 38; OR Form 1040EZ, line 11. The instructions to calculate that are here, on page 5.
The penalty for 2014 is relatively cheap in order to transition Obamacare into your life. Be aware, however, that next year and in subsequent years, the penalty goes up swiftly — pressuring you to get a health insurance plan or else pay the piper.
Here’s how it works:
“Beginning in 2014, absent a qualified exemption, you will be required to obtain health insurance. If you fail to comply, you will be subject to a penalty of 1.0% of your annual income or $95.00, whichever is greater.
In 2015, the penalty increases to the greater of 2.0% of annual income or $325 per person. The following year it becomes the greater of 2.5% of income or $695 per person. After 2016, it will be indexed to the cost of living.
It should also be noted that the maximum penalty is capped at three times the per person penalty. For example, if you earn $28,500 in 2014, 1.0% of your income would equal $285. Therefore, if you earn more than this, your maximum penalty would remain the same. All penalties will be due and payable with your annual federal income tax return. Hence, the penalty for 2014 would be due by April 15, 2015 and the IRS will be the collection agency used.”
The method of assessing and collection the fee is through the Internal Revenue Service (IRS). The fee will be collected by deducting its cost from a person’s tax refund. But for those who don’t get a refund, the IRS isn’t allowed to demand payment either, so it is unclear how those fees will be attained. This ambiguity also leads to further questions about how Obamacare is being actually being paid for (as the penalty is one of the revenues to help offset the costs).”
Not sure if you qualify for an exemption to maintain qualified coverage? The IRS rules allow an exemption if you:
–Have no affordable coverage options because the minimum amount you must pay for the annual premiums is more than eight percent of your household income, OR
–Have a gap in coverage for less than three consecutive months, OR
–Qualify for an exemption for one of several other reasons, including having a hardship that prevents you from obtaining coverage, or belonging to a group explicitly exempt from the requirement.
Interestingly, Sylvia Burwell, the Secretary of Health and Human Services, indicated today that “that the administration might offer some enrollment flexibility around the April 15 tax deadline, so that people who suddenly realize they face a penalty for remaining uninsured could have an opportunity to remedy that.” Burwell, however, did not offer any specifics of what that flexibility might look like.
Sunday, February 15 is the Obamacare enrollment deadline. The CBO lowered its target for this year, from 13 million paid enrollees, to 9.1 paid enrollees. According to the latest figures which combine “HHS data on enrollment through HealthCare.gov and the 14 state-run exchanges, more than 10 million people had signed up as of earlier this month. That means they’d selected a plan, but many still have to make their first premium payment to get covered. Inevitably, some won’t do that.” Also note, New York announced today that citizens have an extended enrollment deadline until February 28 to enroll in Obamacare coverage on the state exchange.
Last year, 6.7 million people paid for Obamacare coverage, a number far fewer than Administration officials predicted when Obamacare began in October 2013.
by | ARTICLES, BUSINESS, ECONOMY, GOVERNMENT, OBAMA, POLITICS, TAXES
The government is still running more than a half-trillion dollar deficit right now, with one month left to go in the fiscal year, despite record revenue being hauled in.
CNSNews reports that “Inflation-adjusted federal tax revenues hit a record $2,663,426,000,000 for the first 11 months of the fiscal year this August, but the federal government still ran a $589,185,000,000 deficit during that time, according to the latest Monthly Treasury Statement.”
Thus, the government is still over-spending, to the tune of $3,252,611,000,000 in total expenses so far this year.
Here’s the breakdown of revenue:
Individual income taxes: $1,233,274,000,000
Corporate income taxes: $247,200,000,000
Employment and general retirement (off-budget): $674,338,000,000
Employment and general retirement (on-budget): $209,281,000,000
Unemployment insurance: $54,591,000,000
Other retirement receipts: $3,155,000,000
Excise taxes: $73,051,000,000
Estate and gift taxes: $17,702,000,000
Customs duties: $30,902,000,000
Miscellaneous receipts: $119,933,000,000
So just remember, the problem isn’t enough tax revenue or underfunded programs — it’s that the government can’t seems to stay on budget or within its revenue receipts. All this overspending does is just continue to add to the growing deficit.
by | HYPOCRISY, SOCIAL SECURITY, TAXES
One of the most common means by which politicians deceive their constitutents is by referring to Social Security as a either a tax or as a retirement system — but usually only as the politics or issues of the day suit them.
We have politicians who stand strongly behind the concept that Social Security must be maintained because it’s a retirement system that people pay for. I certainly believe, as FDR did when he started Social Security, that this is a forced retirement system. As such, it is critical that the entity managing it (the federal government) include Social Security’s actuarially calculated expenses in the current year. By not doing that with their accounting, they are able to simultaneously mischaracterize Social Security as a tax.
If Social Security is truly a retirement and disability plan, it is patently unfair to also consider Social Security collections as a tax that is paid. This is hypocrisy to the citizens contributing toward their retirement. Therefore, when you hear a politician calling Social Security a tax, understand that such a description qualifies it as an entitlement supported the general revenue fund. It can’t be both. The true Social Security Fund, as it is currently being collected and paid out, has been stolen from the taxpayers.
Social Security as a retirement plan has lost its meaning along the way. Yes, benefits promised to recipients have been much more than the amounts taken from pay. For that reason, and for the way by which Social Security is accounted by the government, the system is broken. Nevertheless, we must fundamentally maintain the view that Social Security is the way by which people pay for their own retirement — if we are to fix the imbalances.
The way to lead Social Security back to health is to convince people that the amounts taken from their pay is protected and truly going to their retirement by reclaiming the Social Security Fund so it reflects that reality. Often when it’s realized how little income tax many people pay, the focus typically goes on to how much people do pay toward Social Security. This is not altogether a bad thing. With citizens trying to retire at the age of 65 but often having life expectancies until 90, people need to contribute more money to their retirement.
We need to restore Social Security to a level of sustainability by moving it back to being a path to retirement, view it as a forced retirement system, and hold it accountable in that regard. By modifying the system to be more like present-day 401ks, people can better realize the amount that they are actually putting in. In doing that, more people will ultimately be happy with their Social Security accounts and will also make a mockery of such recent legislation as the payroll tax holiday.
If though, the powers that be continue to insist Social Security is a tax, then the fact becomes that people are really not paying for their own retirement. Therefore beneficiaries are not entitled to anything other that what Congress on a whim decides, because it is subject to the general revenue fund via tax revenue. This would be an outrageous outcome. It turns Social Security into a means by which the people are dependent on government to provide a modest stipend by extracting money from us.
by | ECONOMY, HYPOCRISY, TAXES
Other pundits are writing about tax cuts and wondering how aloud how the Republicans vote against a tax cut. The answer is simple: the temporary payroll Social Security tax reduction is not, never was, and never will be a tax cut.
There are many ways to look at the 2% reduction in the Social Security tax that is being collected. But effectively, it is no more than a spending increase all dressed up to look like a tax cut. The cost to taxpayers was $120 billion dollars. Congress simply decided to put more money into the hands of the lower and middle class. Rather than write a check, they made the 2% payroll decrease on the Social Security tax collection rate so workers could see a tangible benefit in their paychecks. But because it is temporary, and because it is limited, it has none of the effects of a true tax cut. As it’s been shown in history, most recently with the Making Work Pay tax credit for example, such temporary items have none of the stimulative effects on the economy. It served no purpose other than to create political turmoil among voters, party lines, and taxpayers.
What’s worse, no one is talking about the fact that the Democrats plan to pay for this holiday and its proposed extension ($265 billion), by levying a surtax on successful Americans earning over $1 million. This is legal plunder. It is redistribution of wealth at its core. Our government borrowed money directly intended for the Social Security Fund, and now wants someone else to pay for it. The so-called tax cut is really a net tax increase on the very Americans who are most responsible for job creation in this country. Just the effect of debating this nonsense in Washington continues to stifle businesses and harm our economy.
by | BUSINESS, ECONOMY, TAXES
There are rumors circulating around the country that the Congressional Super Committee may take action that would immediately repeal the $5 million gift tax exemption by Thanksgiving. This is sending countless tax lawyers and accountants scurrying to complete gift planning that the law tells them they have until December 31, 2012 to complete. The lifetime gift level tax exemption was temporarily increased to $5 million under the 2010 Tax Relief Act for 2011 and 2012. Neither the Obama administration nor Congress have commented on these rumors, causing great concern and uncertainty. An about-face reversal with little notice would be extremely disruptive, unfair, and inequitable.
Regardless of how many or few people this change would affect, the fact that this Congressional committee would have the ability to alter the law midstream on the taxpayers who have been working on their long-term plans is outrageous. Any taxpayer – wealthy or not – should be entitled to be able to rely on their current tax law when making tax decisions, and, if a law might be modified, have ample time to implement necessary changes. The real possibility that the aforementioned law might be changed as of the super committee deadline is unconscionable.
This disruption, just by the speculation that is not being refuted or confirmed, is causing great stress. Most of the taxpayers to be impacted by such a change are the very people who create the jobs in this country. With business people dropping everything to deal with these rumors which could have major effects on their business transition plans, it could also impede job growth.
If there were to be such action taken by the Super Committee, it is likely to do serious harm to the United States economy. But more importantly, it reveals the shallowness of any real commitment to tax equity and transparency. The country seems to be rallying around the concepts contained within the Simpson-Bowles and the Rivlin-Domenici reports, both pushing for greater transparency and comprehensive and reliable tax reform. It would be abhorrent if this ‘new direction’ had, as its first implementation, a huge gotcha moment.
