Lewitz, Balosie, Wollack, Rayner & Giroux, LLC 
Certified Public Accountants
Newsletter


June 2014
In This Issue:
Connecticut Tax Update
Foreign Account Reporting
Health Insurance Premium Reimbursements
Excise Tax on HRAs
Connecticut
Tax Changes

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2014 legislative changes include:

Sales and Use taxes must be remitted by the 20th day of the month, rather than the last day, starting October 1, 2014.

 

A portion of teacher's pensions will be exempt from state tax, starting with 10% in 2015, 25% in 2016 and 50% in 2017 and after.

 

Income from nonqualified deferred compensation plans earned in CT while a resident is sourced to CT and taxable for non-residents.

 

The tax exemption for amounts used for eligible purposes of the Manufacturing Reinvestment Account  increase from 50% to 100% effective July 1, 2014.

 

 

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 Filing Deadline for FBAR Approaches

 

The deadline for filing the 2013 Report of Foreign Bank and Financial Accounts (FBAR) is June 30th. In the past this report was sent in on paper, but this year the form must be efiled with the Financial Crimes and Enforcement Network (FinCEN), a bureau of the U.S. Treasury. The report is now made on Form 114, which is much the same as the prior paper-filed Form TD F 90-20.1.

 

Are you subject to FBAR filing? It applies to any U.S. person with a financial interest in or signature authority over a foreign financial account if the aggregate maximum value of all the accounts exceed $10,000 at any time during the year. A "U.S. Person" includes a U.S. Citizen, entities such as a corporations (including  nonprofit organizations) or partnerships organized in the U.S., and trusts or estates formed under the laws of the U.S.

 

Not sure if this applies to you? It is best to find out because the penalties are severe: civil penalties up to the greater of $100,000 or half the account balance and criminal penalties of $500,000 or 10 years in prison, or both.

 

A jury in Florida recently found a taxpayer liable for civil penalties for willfully failing to file FBARs for three years.  The balance of the foreign account exceeded $1.4 million during the period and the penalties assessed were over $2.2 million.

 

  
  
 Health Insurance Premium Reimbursements No Longer Tax-free

 

The Affordable Care Act changes the way employers can treat premium reimbursements. Prior law allowed an employer to reimburse employees who obtained insurance outside the company (often by participating in a spouse's plan) as a tax-free fringe benefit.  Not so any longer.  A recent IRS notice clarifies that these arrangements cannot be integrated with individual policies to satisfy required market reforms and may be subject to a $100 per day excise tax per employee. Employers can now reimburse employees for individual policies only if the amount is included as a taxable benefit.

  
  
 Excise Tax on Health Reimbursement Arrangements

 

A health reimbursement arrangement (HRA) is an employer-funded plan that reimburses employees for qualified medical expenses.  Amounts are generally excludable from income and are often used to cover the employee's share of health insurance premiums or the policy's required deductible.  The Patient Protection and Affordable Care Act imposes a fee for these self-funded health plans. The fee was $1 per HRA employee for the first year and has increased to $2 for the second year.

 

The tax is remitted with Form 720, the Quarterly Federal Excise Tax Return and is due by July 31, 2014.

 

 

 

Above photographs are of North Cove, Old Saybrook and the Connecticut River from Old Lyme

 

 

A word of caution: this is a brief summary and does not include all of the details that may impact your individual situation. Please contact us if you would like more information.

 

About Lewitz, Balosie, Wollack, 

Rayner & Giroux, LLC

 

Our five partners have over 160 years of combined professional experience.  We provide accounting, tax, and financial services to individuals, businesses, nonprofit organizations, estates, and trusts.  Our services include tax return preparation, software consulting, and compilations, reviews, and audits of financial statements.  We have been located in the shoreline community of Old Saybrook, Connecticut for over 50 years.  Feel free to contact us if we can be of service.  We can be reached at 860-388-4451.

 

 

 

IRS Circular 230 Disclosure

 

To ensure compliance with requirements imposed by the Internal Revenue Service, we inform you that any tax advice contained in this communication, unless expressly stated otherwise, was not intended or written to be used, and cannot be used, for the purpose of (i) avoiding tax-related penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any tax-related matters addressed herein.