Tag Archives: RWR

Some “Obamacare” Penalties Delayed

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Late last week, the Obama Administration announced that it will delay until 2015 the penalty imposed on employers for not providing “minimum essential health care coverage” to its employees as part of the Affordable Care Act.  The penalty would have applied to employers with 50 or more full time equivalent employees starting in 2014.

Based on the press release by the Treasury Department, the agency in charge of imposing the penalty, as well as writing the regulations explaining how to comply with the law, there has been significant push-back from the business community about the penalty.  The main concerns raised are the lack of clear guidance from the Treasury department on a penalty that was to go into effect in five short months, as well as the complexity of reporting proposed by the department and the burden that reporting would impose on employers.

The “individual mandate” requiring individuals to have health insurance or be assessed a penalty, is still set to go into effect at the beginning of 2014.  The requirement for employers with more than 250 employees to report the value of employer-provided health insurance on the employee’s W2 is also still scheduled to go into effect in 2014.

Based on the implementation of the Affordable Care Act to date, it would not be surprising to see more delays announced on other parts of the law in the future.  The best advice when working with this law is to determine how it will affect your business and work to comply with the law as it stands at the end of the year.  This also happens to be the advice of the Treasure Department as well.

We’re here to help, as we have been for more than 30 years.

July 1st Update

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Starting today, a number of tax-related changes agreed to during the last legislative session go into effect, along with the effect of one key U.S. Supreme Court ruling.  Below is a summary of the key points.

  • The new, 9.85% top Minnesota tax rate went into effect, but is retroactive to January 1st, 2013. Those that are single with taxable income of more than $150,000, and married couples with more than $250,000 in taxable income will see the new 9.85% rate imposed on income over those amounts. This also points to a significant marriage penalty, since two single people can earn $50,000 more than a married couple before the new tax kicks in.
  • Starting with Minnesota tax refunds issued in 2014, those not choosing direct deposit will instead be issued a prepaid debit card; paper checks will no longer be issued.
  • The following items paid by an employer on behalf of an employee will now be subject to Minnesota income tax (these items are still exempt on the Federal level, but starting January 1, 2013 not for Minnesota). In these cases, Box 16 of the employee’s 2013 W2 will likely exceed Box 1.
    • Up to $5,250 of education expenses for education not directly related to the employees job. This includes many tuition reimbursement programs.
    • Up to $12,970 of adoption expenses paid on behalf of an employee or reimbursed to them.
    • Transit passes and vanpool expenses in excess of $125 per month.
  • The U.S. Supreme Court overturned the Defense of Marriage Act (DOMA), which clears the way for same-sex couples that are legally married in their state of residence to file joint tax returns. Beginning August 1st, 2013, same-sex couples will be allowed to marry in the State of Minnesota, allowing them to file jointly on both the Federal and State tax returns, which simplifies the process significantly. Those couples with income from states other than those that allow same-sex marriage will still face significant hurdles to correctly filing in multiple states.

We’re working hard to keep up on the changes as they come about, including the impending enactment of most of the Affordable Care Act.

New Tax Rates and Other News

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After a rather quiet spring, there has been a flurry of tax-related activity and news from both the State Capitol in St. Paul, as well as Capitol Hill in Washington.  Here are a few things to keep your eye on.

  • At the State Capitol, lawmakers are debating a tax bill that will raise income taxes on the “top 2% of taxpayers” to a new top rate of 9.4%, giving Minnesota the 4th highest tax rates in the country. There is some confusion on what the “top 2%” actually is. Some reports place this new top tax rate on married taxpayers with taxable income of more than about $140,000, while other reports state the new top rate will kick in on married taxpayers with taxable income of more than $250,000. The House passed the bill late last night, and the Senate has yet to vote on the matter. No matter how it passes, the Governor is expected to sign it.
  • The same tax bill being debated in the Senate lowers the sales tax in Minnesota from 6.875% to 6.0%, but subjects a number of things to sales tax that were previously exempt, most notably all clothing, warehousing services, and attorney’s services. It also raises the per-pack cigarette tax significantly.
  • In the wake of the IRS appearing to inappropriately target conservative organizations seeking non-profit status, the acting commissioner of the IRS has stepped down, and will face a second day of questioning by the Senate today.
  • Also, due to the cuts imposed by the sequester, the IRS will be closed entirely this Friday, May 24th. No phone lines will be answered, no returns will be processed, and all enforcement activity will cease for that day. This is the first of a number of scheduled closures that will take place over the summer.

We will keep a close watch on the votes at the State Capitol and let you know the details once they pass the final tax bill.

Weekly Economic Update

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The Markets:

Markets turned out another solid performance last week as all three major indices reached new highs. With minimal economic data for investors to chew on, earnings drove most of the market action last week. On Tuesday, the S&P 500 set a new high while the Dow notched its first close above the 15,000 mark. Industrials, technology, and consumer discretionary stocks led the gains while utilities and consumer staples dropped. For the week, the S&P 500 added 1.19%, the Dow gained 0.97%, and the Nasdaq increased 1.72%.[1]


As we near the end of earnings season, 90% of S&P 500 companies have reported in, with 67% beating earnings expectations. If all remaining companies post numbers in line with estimates, earnings will be up 5.3% over the first quarter of 2012. However, most companies are still missing their revenue estimates, with only 46% beating their own revenue projections. Next week, a handful of major retailers are due to report, which, along with Monday’s retail sales report, will give sector analysts a lot to think about.[2]


After markets closed for the weekend, Federal Reserve officials announced their strategy for unwinding QE3, their unprecedented $85 billion per month bond-buying program. While they didn’t confirm the timing of intended moves, officials said they plan to reduce bond purchases in careful, measured steps as they monitor the job market and inflation. Because it doesn’t look like the Fed intended this announcement to mark the end of quantitative easing, it appears they meant to signal their flexibility in managing the programs in the months ahead.[3]


Looking ahead, the bulls could keep running next week as long as economic reports on labor, retail sales, industrial production, and manufacturing don’t disappoint. However, with equities reaching new highs, there are plenty of opportunities for weakness to end the run. If investors think that markets are overbought, some consolidation might occur. The market activity thus far suggests that investors are betting on increasing economic growth, and the Fed’s announcement seems to indicate that officials aren’t too worried about the U.S. economy at this time. As always, we’ll keep an eye on the action and will keep you informed.


ECONOMIC CALENDAR:
Monday: Retail Sales, Business Inventories
Tuesday: Import and Export Prices
Wednesday: Producer Price Index, Empire State Mfg. Survey, Treasury International Capital, Industrial Production, Housing Market Index, EIA Petroleum Status Report
Thursday: Consumer Price Index, Housing Starts, Jobless Claims, Philadelphia Fed Survey
Friday: Consumer Sentiment

Disclaimers and Sources

Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Diversification does not guarantee profit nor is it guaranteed to protect assets. The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the NASDAQ. The DJIA was invented by Charles Dow back in 1896.  The Nasdaq Composite is an index of the common stocks and similar securities listed on the NASDAQ stock market and is considered a broad indicator of the performance of stocks of technology companies and growth companies. The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) that serves as a benchmark of the performance in major international equity markets as represented by 21 major MSCI indexes from Europe, Australia and Southeast Asia. The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market. Google Finance is the source for any reference to the performance of an index between two specific periods. Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. Past performance does not guarantee future results. You cannot invest directly in an index. Consult your financial professional before making any investment decision. Fixed income investments are subject to various risks including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications and other factors. These are the views of Platinum Advisor Marketing Strategies, LLC, and not necessarily those of the named representative, Broker dealer or Investment Advisor, and should not be construed as investment advice. Neither the named representative nor the named Broker dealer or Investment Advisor gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your financial advisor for further information.  By clicking on these links, you will leave our server, as they are located on another server. We have not independently verified the information available through this link. The link is provided to you as a matter of interest. Please click on the links below to leave and proceed to the selected site.

[1]  http://briefing.com/investor/markets/weekly-wrap/weekly-wrap-for-may-6-2013.htm

[2]  http://www.cnbc.com/id/100727118

[3]  http://online.wsj.com/article/SB10001424127887324744104578475273101471896.html

[4]  http://www.usatoday.com/story/money/business/2013/05/08/late-payment-rate-mortgages-1q/2143699/

[5]  http://www.cnbc.com/id/100727407

[6]  http://www.reuters.com/article/2013/05/10/usa-economy-budget-idUSL2N0DR3LK20130510

[7]  http://thedailyrecord.com/2013/05/12/u-s-shows-budget-surplus-for-april/#ixzz2TAvsbAQI

[8]  http://www.latimes.com/business/autos/la-fi-hy-lower-summer-gasoline-prices-20130508,0,996849.story

2014 HSA Contribution Amounts

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On Friday, the IRS announced the maximum HSA contribution amounts for 2014, as well as what qualifies as a High Deductible Health Plan (HDHP) for 2014.

2014:

Maximum Contributions: $3,300 Self-Only, $6,550 Family Coverage

Minimum Deductible for HDPD: $1,250 Self-Only, $2,500 Family Coverage

As a reminder, here are the limits that apply for 2013:

Maximum Contributions: $3,250 Self-Only, $6,450 Family Coverage

Minimum Deductible for HDPD: $1,250 Self-Only, $2,500 Family Coverage

HSA contributions can be made up to the due date of the tax return, not including extensions.