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Opposition Mounting Against The Proposed “Age Tax”

elderly couple holding handsMillions of Americans within the 50 to 64 age bracket buy their health insurance through marketplaces supported by the Affordable Care Act. If the Republicans succeed in their plan of dismantling Obamacare (ACA), those Americans may get a big and unwelcome surprise in regard to their monthly premiums.

Because older Americans typically require more healthcare services and products than younger Americans, insuring them is more expensive. The amount of money, however, that insurers can charge older Americans relative to the younger ones is capped by the ACA at a 3:1 Ratio. On top of the cap, Obamacare provides financial support with premiums as well as out-of-pocket expenses in an effort to keep healthcare costs for older Americans down.

Repeal and Replace Version of ACA

Recently, the Senate began debating on repealing the Affordable Care Act (ACA). Known in some quarters as Ryancare, the new version of the “Repeal and Replace” Affordable Care Act is seen by many as an attack on old people and retirees.

When you critically analyze the proposal that is being championed by the President and Republican Senator from Wisconsin, Paul Ryan, it’s clear that the goal is to strip away Medicaid Coverage along with taxes currently being levied on sections of the most affluent in America. But less affluent, older Americans will end up paying more. Besides weakening Medicare, the proposed Bill would also trigger a health care coverage loss for over 24 million Americans.

The Bill Components

One measure being considered by the lawmakers is a bill that imposes an “age tax” on Americans who are over 50 years, and raising premiums paid by older Americans by about $13,000 annually. This would leave an excess of Americans without health insurance coverage.

Another aspect virtually repeals all of the Affordable Care Act without any replacement. Estimates made by the Congressional Budget Office (CBO) indicate the result would have 32 million Americans losing their health insurance coverage. A third approach seeks to just eliminate a requirement that individuals should get health insurance and that large employers should offer coverage.

AARP Opposes New Health Care Bill

According to AARP’s Executive VP, Nancy LeaMond, they oppose the proposed bill which they term as an “age tax.” AARP is opposed to the legislation being introduced as it would weaken Medicare, effectively leaving the door wide open to the introduction of a voucher program that would be shifting the risks and costs to seniors. Even before attaining retirement age, insurance companies will be allowed to charge people an age tax that every year adds up to thousands of dollars more. According to Nancy LeaMond, any senator who thinks of voting for the new bill should appreciate the consequences of 38 million AARP members being ignored.

Conclusion

If the new Bill passes, the ACA shifts to a flat tax credit system based on age from an income-based system. Older people need health care services as well as prescriptions that are affordable. The new plan is heading in the other direction, not taking … Read More

Multiple Tax Deductions On The Chopping Block

tax documentsPeople expect certain services from a country, such as roads, protection, and assistance. All of these services cost a certain amount of money, which is the reason people agree to pay taxes.

So far, most of this makes sense, but things start to change when tax codes start distinguishing how much a poor person pays and how much a rich person pays into the system. Deciding just how much a large corporation should pay as opposed to a small business can be hard, which makes tax reform a hot topic.

The new administration, under the guidance of President Trump, is aiming to slash a few rates and change the tax code. Many are speculating that certain itemized deductions taxpayers have enjoyed for a long time might vanish under Trump.

The Trump administration wants to get rid of most deductions, except for those associated with mortgage interest and charitable contributions. Around 30 percent of tax filers itemize specific items, meaning that a lot of Americans stand to lose money. Of course, this is something many tax payers do because their deduction exceeds the standard deduction.

Households that make more than $200,000 gain the most by itemizing, though they are not the only ones. There are still others who use this opportunity to save a little cash during the tax season.

The Treasury Secretary, Steven Mnuchin, believes that getting rid of these tax deductions will help ensure the rich do not take advantage of the deductions and try to hoard money, but it seems that these changes are going to affect people across several tax brackets.

One deduction that may be on its way out is the state and local deduction, which allows taxpayers to write off their state, local, and general sales taxes as well as property taxes.

Medical expenses that exceed 10 percent of a person’s adjusted gross income may also be deducted, but some of the tax reforms proposed may eliminate this, too. It is true that some of the House and Senate repeal-and-replace proposals would have preserved this deduction. The proposals went as far as attempting to make more people eligible for the deduction. Still, one has to compare this to the amount of people who may be without health insurance, which is a large number.

The tax reforms proposed may also get rid of the deduction given to those who pay interest on loans for income-producing investments. This is going to affect individuals who buy stocks or other similar expenses for personal growth, though this does include businesses as well.

Miscellaneous expenses might not be covered anymore. This includes expenses like prior tax year tax preparation fees, employee expenses such as union dues or even work travel expenses. Any expenses related to work improvement, such as taking job-related classes may no longer be deductible. Granted, miscellaneous expenses, combined, cannot really exceed two percent of a taxpayer’s AGI, but every little bit helps in these uncertain times.

There is a reason to be concerned about these possible

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Floyd “Money” Mayweather’s Tax Troubles

Flody Mayweather Weighing InThe IRS is currently demanding boxer Floyd Mayweather Jr. pay his outstanding 2015 federal income taxes, amounting to about $22.2 million. In response, the boxer, who goes by the nickname “Money,” has filed a Tax Court petition requesting the IRS to grant him more time to settle his outstanding tax liability. However, tax lien documents from the IRS indicate that the boxer has been either unable or unwilling to pay his taxes on time over the past decade or so. In fact, the IRS has filed over two dozen liens and releases from those liens in Clark County, Nev., in Floyd Mayweather’s name since 2004. The lien documents reveal Floyd Mayweather has owed the IRS $3.1 million, $7.1 million and $6.1 million in outstanding taxes at various points. Despite earning hundreds of millions of dollars from fights and establishing his own boxing promotional firm, the boxer regularly accumulates huge tax debts, some of which have gone unpaid, according to public tax records, and this could have far-reaching consequences for the boxer.

Mayweather’s “Money” Persona

Floyd’s brand portrays him as being ridiculously wealthy to the point that he doesn’t give much thought to spending enormous amounts of money on expensive things, such as limited edition supercars. For instance, at one point in an interview with Stephen A. Smith, the boxer says his Bugatti is a “cheap” Bugatti because, according to the boxer, it is not the most expensive Buggatti money can buy. The Mayweather persona is about wealth and unlimited amount of money as much as it is about boxing. In fact, Mayweather calls his company, crew and lifestyle gear “The Money Team.” However, whether Floyd Mayweather is actually obscenely wealthy or just pretends to be, the reality is the boxer has failed to settle his tax obligations on several occasions since 2004. Public records from Clark County, Nev., show that the IRS filed tax liens against Floyd Mayweather in 2007, 2008, 2011 and 2012. The records also show the corresponding releases for these liens. However, the IRS has filed another lien this year (2017) against the boxer, claiming the boxer has not settled his 2015 tax obligations in full. In total, the IRS is demanding about $22.2 million from Floyd Mayweather.

Large Investments

It is important to note that the existence of these liens does not necessarily prove Floyd “Money” Mayweather is broke. Put another way, a person can be cash-poor but own high value assets such as valuable art collections, property and stocks. It is an open secret that Floyd Mayweather has plenty of high value assets that the IRS can put a lien on, such as his collection of expensive supercars. Still, someone who claims to be rich beyond imagination and whose brand revolves around money should be willing and able to pay his taxes on time. The boxer’s PR team has found a way to put a positive spin on the issue, with Mayweather’s tax attorney, Jeffrey Morse, recently telling Fight Hype, an online news resource, that

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Who Will Benefit From The Tax Breaks Under The GOP’s Newly Proposed Healthcare Bill?

The U.S. Capitol BuildingIf the GOP’s newly proposed healthcare bill, the American Health Care Act (AHCA), becomes law in its current state, it would change or repeal more than a dozen taxes that help fund Medicare and Medicaid subsidies under the Affordable Care Act, commonly known as Obamacare. The taxes targeted for repeal include taxes on corporations, as well as taxes related to individual income. According to estimates from the Congressional Budget Office (CBO), the federal government’s revenue would decrease by $700 billion over the next decade due to these tax cuts. The winners of the tax breaks under the GOP’s newly proposed healthcare bill include:

High-income Earners

The Senate bill will give high-income earners (individuals who earn at least $200,000 annually or couples that earn $250,000) a tax break by eliminating two Medicare taxes on such individuals. Specifically, it would eliminate the 0.9% Medicare payroll tax and the 3.8% tax on net investment income, including bonds, stocks, capital gains and interest, levied by the Obamacare to help fund Medicare subsidies. However, by repealing these two taxes, the federal government stands to lose about $231 billion in revenue over a 10-year period, says the CBO.

Healthy, Mid-income Earners

While Obamacare gives tax credits to low-income earners to enable them purchase health insurance through the Health Insurance Market, it caters only to individuals who earn less than $48,000. The AHCA, on the other hand, extends these tax credits to Americans who earn upward to $100,000. Moreover, the AHCA makes it easier for insurers to charge lower rates to young people. Obamacare allows insurers to charge the oldest enrollees up to three times as much as the youngest enrollees. Under the AHCA, insurers would be able to raise premiums for the elderly and at the same time, lower premiums for young Americans. In fact, according to estimates from the RAND Corporation, this policy would lower the annual health insurance premiums for the average 24-year-old American from $2,800 to about $2,100.

Individuals with Pre-existing Conditions

The Senate bill ensures insurers do not deny individuals with preexisting conditions coverage. Moreover, its “continuous coverage” protections prohibit insurers from charging such individuals more than the applicable standard rates. The bill also creates funds to assist states take care of individuals with preexisting conditions. These funds include the $100 billion Patient and State Stability Funds intended to assist states stabilize their individual markets by lowering costs and improving access for patients. The Invisible Risk Sharing Program will provide an additional $15 billion to help insurers cover high-cost enrollees.

Large Employers

Unlike Obamacare, the Senate bill would not require employers to provide their employees with affordable coverage. Consequently, companies will enjoy several benefits. Firstly, companies that fail to provide cover for their employees will not get in legal trouble. Secondly, large companies will have less work to do in regards to complying with reporting requirements. Thirdly, the federal government is likely to take longer to implement the tax on high-cost employer health plans.

Conclusion

If the AHCA, becomes

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The Tax Liability of Crowd Funding Campaigns

A woman browsing a crowd funding websiteDid you know that supporting a crowdfunding campaign by generously donating money, could have an impact on your tax burden?

The IRS’s reporting requirements for crowdfunding donations cover everything from personal donations to creating campaigns on crowdfunding platforms such as GoFundMe. This means that you should understand the potential consequences of donating money to a good cause to avoid getting into trouble with the IRS.

Tax Consequences to the Donor

As a donor, you may be unable to claim a charitable deduction from the IRS if the recipient of your contribution does not fall under section 501(c)(3). In such a case, your charitable contribution would not lower your taxable income, which means it would not lower your taxable burden. The IRS does not treat donations from one individual to another as charitable donations. Instead, it treats them as nondeductible gifts to the recipient of the funds. This means that such donations may or may not attract a gift tax depending on the total amount. Specifically, if your donations exceed the annual exclusion amount, which is $14,000 in 2017, you would have to fulfill the necessary reporting requirements and pay the relevant gift tax. On the other hand, if they fall below this amount, they would have no tax consequences, so you would have no reporting requirement.

Tax Consequences to the Recipient

If you are the recipient of funds donated by donors out of their own generosity, there is no tax consequence to you. This means no exclusion amount, no tax on the receipt of such gifts and the IRS would not treat your gifts as taxable income. However, the IRS requires third-party payment settlement entity (PSE) entities to file Form 1099-K if a payee’s receipts exceed $20,000 or when the payee receives 200 donations or more. That means that if you use a crowdfunding platform, such as GoFundMe, to collect and distribute contributions to you and your account attains one of these thresholds, the organization will use Form 1099-K to report your recipients to the IRS.

Additionally, the organization will send you a copy of the form as well. While receiving Form 1099-K can be disconcerting, it does not necessary mean that your tax burden has increased. However, you may have to explain to the IRS the nature of your crowdfuning campaign. In essence, you would have no tax consequence if the gifts to you were out of generosity. At this point, it is important to note that, if you offer contributors a service or product in exchange for funds, then the IRS would treat the receipts as taxable income, meaning they would have a tax consequence. More specifically, you would have to pay income taxes.

Mistakes to Avoid

When creating a crowdfunding for someone else, either a friend or a loved one, you should avoid listing yourself as the payee. If you do so, it would report under your Social Security number and this could cause several problems for you. Firstly, while the receipts may not attract income

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Jersey Shore Star in Tax Trouble

the Jersey shore boardwalkMike “The Situation” Sorrentino is facing serious legal issues together with his brother Marc Sorrentino. The duo have been indicted by the Department of Justice on various charges, including tax evasion and structuring and falsifying records. These fresh charges add to the Sorrentino brothers’ woes since they both currently have pending cases.

In 2014, they were charged on multiple tax-related cases. Mike faced one count for failure to file a 2011 tax return and one count for conspiracy. In addition, he was also charged with two counts of misrepresenting the facts in his tax returns between 2010 and 2012. When it comes to the latest charge, he is accused of structuring funds in an attempt to dodge currency transaction reports.

On the other hand, Marc is accused of falsifying documents with the aim to obstruct an ongoing grand jury investigation. The Feds initially alleged that while working as his brother’s manager, Marc evaded tax using two companies under their control. The entities in question are MPS Entertainment and Situation Nation.

The companies were registered as S-Corporations, thus making them pass-through entities. This means all expenses and income linked to the firms pass through to the shareholders (the Sorrentino brothers). The Department of Justice alleges that the duo purposefully collected funds from the entities to cover a wide variety of personal expenses.

It has been reported that the brothers used the money to buy expensive clothing, and flashy vehicles. The transactions were recorded as legitimate business expenses. They also are accused of understating income received by both Situation Nation and MPS Entertainment.

In 2011, Mike was accused of failure to file a tax return after netting an annual income of almost $2 million. The Feds state that he committed the offense by concealing his income, falsifying documents relating to the corporate return for Situation Nation. Additionally, he also failed to file personal return.

These charges are very serious, and I hope that the Sorrentino brothers have hired themselves a top notch tax attorney!

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