If you still want to make a 2014 contribution to your traditional IRA there is still time! Most taxpayers have until April 15, 2015 to make their 2014 contribution.

Contributions can be made to your traditional IRA for a year at any time during that year or by the due date for filing your return for that year, not including extensions.

Don’t forget about the 70½ rule though… traditional IRA contributions cannot be made for the year in which you reach age 70½ or for any later year. Contributions can only be made to your traditional IRA for each year that you receive compensation and have not reached age 70½.

Source: www.irs.gov

Did you receive a premium credit to help pay for your health insurance through the exchange? Calculate your return carefully and be aware that some penalties will be waived (eas)
*******************************************************
The Internal Revenue Service said it will waive some penalties related to advance payments of the premium tax credit for health insurance purchased under the Affordable Care Act in 2014.

Under the ACA, taxpayers who get an advance payment of the credit are required to reconcile the credit with their actual income during 2014 and pay back part of the credit if their financial circumstances improved during the year and they didn’t tell the government in time.

Notice 2015-9, issued by the IRS on January 26, provides “limited relief” for taxpayers with a balance due on their 2014 income tax return after they reconcile the credit. Taxpayers who qualify will get relief from the penalty for late payment of a balance due under tax code Section 6651(a)(2). They will also get relief from the penalty for underestimated tax under Section 6654(a).

To get both types of relief, taxpayers must be otherwise current with their filing and payment obligations and report the amount of excess advance credit payments on a timely filed 2014 tax return. To get the Section 6651(a)(2) relief, they also must have a balance due as a result of credit payments.

The IRS said the relief is only available for the 2014 taxable year. It doesn’t cover underpayments of the individual shared responsibility payment—the amount taxpayers must pay the government if they don’t have the level of insurance coverage required by the ACA. Those payments are required under Section 5000A. According to the IRS, underpayments of these shared responsibility amounts don’t qualify for relief under Sections 6654(a) or 6651(a). This is because they aren’t subject to penalties under either of those code sections, the agency said.

The IRS said under Notice 2015-9, taxpayers will be treated as current with their filing and payment obligations if, as of the date they file their 2014 income tax returns, they:

…..have filed, or filed an extension for, all current required federal tax returns; AND

…..have paid, or entered into, an installment agreement that isn’t in default, an offer in compromise, or both to satisfy a federal tax liability. If a taxpayer hasn’t paid a tax because of a “genuine dispute” and the tax liability hasn’t yet been determined, the amount of tax in dispute will be treated as current while the disagreement is resolved, the IRS said.

The IRS said when a taxpayer fails to pay tax, it automatically assesses the Section 6651(a)(2) penalty and sends a notice demanding payment. Taxpayers who receive the notice should send a letter to the address listed in the notice that contains the statement, “I am eligible for the relief granted under Notice 2015-9 because I received excess advance payment of the premium tax credit.”

Taxpayers who file their returns by April 15, 2015, will be entitled to relief under Notice 2015-9 even if they haven’t fully paid the underlying liability by the time they request relief, the IRS said. Those who file after April 15, 2015, must fully pay the underlying liability by April 15, 2016, to be eligible for relief under the notice. Interest will accrue until the underlying liability is fully paid, the notice said.

In order to get relief from the estimated tax penalty, taxpayers must check box A in Part II of Form 2210, Underpayment of Estimated Tax by Individuals, Estates, and Trusts, and complete page 1 of the form. Then taxpayers should include the form with their return, along with the statement, “Received excess advance payment of the premium tax credit.”

The IRS said taxpayers don’t need to attach documentation from a health insurance exchange, explain any circumstances under which they received an excess advance payment of the premium tax credit, or complete any page other than page 1 of the Form 2210.

Taxpayers also aren’t required to calculate the amount of the penalty in order for it to be waived.

Tax season is officially here and new health care law brings changes to the arsenal of IRS tax forms. This year new forms and some changes related to the Patient Protection and Affordable Care Act have been introduced.

In addition to new lines you may see on Forms 1040, 1040A and 1040 EZ related to health care law, new tax forms have been created that some people will need to include with their tax returns.

• Form 8962: Premium tax credit – health insurance coverage purchased through an Exchange (Marketplace)
• Form 8965: Report or claim a health care coverage exemptions
• Form 1095-A: Health insurance Marketplace statement (issued by the Exchange)
• Form 1095-B: Health coverage (issued by insurance provider)
• Form 1095-C: Employer provided health insurance coverage (issued by employer)

Continue reading →