- The Affordable Care Act (ACA) required all large employers to offer affordable coverage to their employees. The Senate bill proposes to eliminate that requirement.
- Similar to the House bill, the Net Investment Income Tax of 3.8% and the Medicare surtax of .9% would be repealed.
- The Senate bill continues to require that insurers offer coverage to those with pre-existing conditions and companies are not allowed to charge inflated premiums based on their medical history. However, states would be given the opportunity to waive those federal provisions and allow insurers to offer less comprehensive benefits.
- States will also be allowed to redefine “essential benefits”. Before The ACA, insurance companies could pick and choose what services would be covered under their policies. The ACA currently requires every health plan to cover “essential benefits” ranging from maternity care, prescription drugs and mental health.
- The Senate bill proposes to continue government subsidies for insurance premiums but will make subsidies available to fewer people. Currently, taxpayers are eligible for a subsidy if household income is no more than 400% above the poverty level. The threshold in this bill is reduced down to 350% and therefore less of the middle class will qualify. These premium tax credits will also be extended to those below the poverty level. Similar to the House bill, the plan aims to increase the credits for younger people and decrease the credits for older adults. One of the key differences between the proposed bills is that the House bill would base the subsidies on age and the Senate bill would base them on income and geography.
- Medicaid enhancements under ACA increased eligibility to 138% of the federal poverty level. Under the Senate bill, this Medicaid expansion will remain as it is until 2021 and then be phased out by 2024. This is a slowed down version of the House bill which would phase out the Medicaid expansion by 2020. Also, states would receive a fixed amount based on a per capita allotment rather than the flexible funding currently offered. Both the Senate and House bills would allow states the option to require work as an eligibility condition for nonelderly, nonpregnant, nondisabled adults.
- Planned Parenthood would be defunded temporarily by both the Senate and House versions of the health care bill. Specifically, Medicaid would be prohibited from funding Planned Parenthood clinics for one year.
- A minor adjustment was added on June 26th to the bill after the initial release. It is a provision to entice Americans to have continuing insurance coverage, as opposed to only purchasing insurance when they need it. There would be a six month waiting period for those that don’t have continuous coverage before they can be covered again. The House bill would allow insurers to impose a 30% surcharge to the on-again off-again policy holders, however the Senate bill would not.
- The Senate bill proposes to increase the annual tax deductible contribution limit on Health Savings Accounts for people in high-deductible plans. Currently the limit is $3,400 for individuals ($6,750 for family). The Senate bill would approximately double those amounts to $6,650 for individuals ($13,300 for family) to match the annual deductible and out-of-pocket expenses of the high-deductible health plan.
On Thursday, June 22, 2017, the U.S. Senate unveiled their version of the health care bill entitled The Better Care Reconciliation Act of 2017. Because of the narrow majority the Republicans have over Democrats in the Senate, if only 2 Republicans vote against it, it will be back to the drawing board. From the stir it’s made since it’s unveiling, changes will most likely need to be made before it would pass the Senate. If a version of this healthcare bill does pass the Senate, the House and Senate would need to reconcile their proposed bills and vote on a reconciliation bill before sending it the President for signature. While we anticipate more changes to come before we have a new law in place, here are a few of the key provisions of the Senate Bill as it is currently written.
BUSINESS EXIT PLANNING SERIES: Maintain Control, Save On Taxes, and Set Fair Value Using a Buy-Sell Agreement
RLH publishes a separate bi-monthly e-newsletter that addresses many of the issues that business owners face when considering how they will exit their businesses. The following is a recent article from that e-newsletter. If you would like to receive all of the bi-monthly content, please click here to subscribe.
There is a strong case for creating a Buy-Sell Agreement for co-owned businesses. If owners agree about how to appraise business value and set the terms of payment in advance of any transfer event, they can avoid the heated and often damaging negotiations that can occur when one owner leaves the company.
Yes, that’s correct, there are some forms of income you receive that may be tax-free. Here is a list of eight common sources of tax-free income.
1. Gifts. Gifts you receive are not taxable income to you. In fact, they are not subject to gift tax to the person giving the gift as long as the gifts received in one year from one person do not exceed $14,000.
2. Rental income. If you rent your home or vacation cottage for up to 14 days, that rental income does not need to be reported. Homeowners often can earn some tax-free income by renting out a home while a large sporting event (Superbowl or a golf event) is in town.
3. Child’s income. Up to the standard deduction amount ($6,350 in 2017) in earned income (wages) and $1,050 in unearned income (interest) for children is not taxed. Excess earnings above these amounts could be taxed and $2,100 in unearned income is taxed at the parent’s higher tax rate.
4. Roth IRA earnings. As long as you meet this retirement account type’s rules, earnings in a Roth IRA are not taxed.
5. Child support revenue. Income you receive as child support is not deemed to be taxable income. On the other hand, alimony received is taxable income.
6. Home sales gains. Up to $250,000 ($500,000 for married filing jointly) in gains on the sale of a qualified principal residence is not taxable.
7. Scholarships/fellowships. Money received to cover tuition, fees, and books for degree candidates is generally not taxable.
8. Refunds. Federal refunds (technically you’ve already accounted for this income) and most state refunds for non-itemizers are also tax-free.
This is by no means a complete list of tax-free income, but it’s nice to know that some areas of tax law still benefit taxpayers.
Hiring your children to work in your business can be a win-win situation for everyone. Your kids will earn money, gain real-life experience in the workplace, and learn what you do every day. And you will reap a few tax benefits in the process. The following guidelines will help you determine if the arrangement will work in your situation.
If you haven’t started saving for retirement or you haven’t saved enough, here are three actions you can take to put you in a better position during your golden years:
Here are five common mistakes of those who deduct home office expenses.
1. Not taking it. Some believe the home office deduction is too complicated, while others believe taking the deduction increases your chance of being audited.
2. Not exclusive or regular. The space you use must be used exclusively and regularly for your business.
4. The recapture problem. When selling your home you will need to account for any home office depreciation. This depreciation recapture rule creates a possible tax liability for many unsuspecting home office users.
5. Not getting help. The home office deduction can be tricky, so ask for help, especially if you fall under one of these cases.
RLH is excited to announce the appointment of C. Ryan Hastings, CPA, CVA to Co-Managing Partner. Ryan will be joining Karl Lehman, CPA, PFS in the Managing Partner role that he has held since 2007. “Ryan has dedicated over 17 years to RLH, 10 of those serving as a Partner. I have no doubt that he will flourish in this new chapter of his career at RLH and I look forward to sharing this new role with him,” says Karl Lehman, now Co-Managing Partner at RLH.
“I very much look forward to working with Karl in this new capacity. I have the utmost respect and admiration for Karl, and he has been an invaluable mentor to me throughout my career. I am especially excited about leading our amazing group of caring, talented, and dedicated professionals. We have some of the best and brightest in the industry, and with our clients’ success as our ultimate goal, we have built the team to deliver. Our future has never looked brighter!”
This announcement is the culmination of several years of internal succession planning for the firm. With the baby boomer generation aging, most industries will be significantly impacted by senior members of management retiring over the coming years. The accounting profession is no different. RLH has been anticipating this change both internally and externally and has assisted a significant number of our clients with this type of transition planning, which has become one of the firm’s fastest growing business consulting services.
While Karl will not be retiring immediately, our proactive planning will ensure a smooth, seamless transition for our team and clients when that time does arrive. Ryan will be transitioning some other administrative firm duties to ensure that his current clients will not be impacted by this change.
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