Intuit TurboTax created a health care calculator to help you find out if you’re eligible for health insurance through a state or federal Marketplace, Medicaid, or Medicare or if you’re already set with your existing health insurance plan.  It will also let you know, if you qualify for a tax credit or subsidy from the government to help you purchase your health insurance.

Check it out to learn how health care reform impacts you so that you can make the best decisions for your health and your wallet.

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Our tax experts have put together a handy glossary of the most common terms surrounding the Affordable Care Act. Read through to find out what these phrases mean and how they’ll affect you.

• Adjusted Gross Income (AGI) – Your gross income minus specific adjustments to income. Your AGI directly influences if you’re eligible to claim many tax deductions and credits available.

• Affordable Care Act (ACA) – The healthcare reform law that expands access to health coverage for all Americans and introduces new protections for people who already have health insurance.

• Co-insurance – The percentage you pay to cover medical expenses after your deductible has been met.

• Co-payment – A fixed amount you pay for covered healthcare services at the time medical service is provided. This amount can change based on the type of service and your health insurance plan.

• Deductible – The amount you owe for healthcare costs up to a certain dollar amount. After you’ve paid the deductible, your health insurance plan begins to pay for your healthcare services.

• Department of Health and Human Services (DHHS) – The government agency responsible for protecting the health of all Americans. The DHHS is in charge of implementing some parts of the Affordable Care Act that relate to health insurance.

• Essential Health Benefits – The minimum set of core benefits health insurance plans must provide under the Affordable Care Act. This includes things like emergency services, maternity and newborn care, and prescription drugs.

• Federal Poverty Level (FPL) – An income level measure issued by the Department of Health and Human Services.  FPL is used to determine eligibility for certain programs and benefits and will be used to determine eligibility for health insurance through the Affordable Care Act.

• Health Insurance Marketplace – Starting in October 2013, Health Insurance Marketplaces will open. These marketplaces are designed to help you find health insurance that fits your family needs and budget.

• Household Income – Often used as an economic indicator, household income refers to total income from all people living in a household. 

• Minimum Essential Coverage – Under the Affordable Care Act, most individuals will be required to maintain this type of health insurance coverage. Government-sponsored programs (like Medicare and Medicaid), employer-sponsored plans, individual market plans, grandfathered health plans and some other types of health coverage already qualify as minimum essential coverage. If you do not have minimum essential coverage in 2014, you may have to pay a tax penalty.

• Out-of-Pocket Costs – Any expenses for medical care that aren’t paid for by your insurance plan.

• Premium – The amount paid for your health insurance for a set time period (like monthly payments or annual payments).

• Premium Assistance Credit – This is a refundable tax credit available to help people purchase health insurance, who can’t afford it. People or families with household incomes of up to 400% of the federal poverty level (about $40,000 for an individual and $89,000 for a family of four in 2011), who do not qualify for other health coverage may be eligible for this credit.

• Qualified Health Plan – A health insurance plan that provides essential health benefits and follows established limits on cost-sharing (like deductibles and co-payments). Under the Affordable Care Act, qualified health plans will be certified by the exchange through which they are sold.

• Subsidy – The amount that the government contributes to help pay for your health insurance.  Under the Affordable Care Act, this subsidy, also know as the premium assistance credit, will help people who can’t afford it pay for health insurance.  If you qualify for a subsidy, it will go directly to your health insurance provider when you purchase insurance to lower your monthly payments or premiums.

• Tax Credit – A dollar-for-dollar reduction of the income tax you owe. Credits are usually designed to encourage or reward certain types of behavior that the government considers to be good for the economy or the environment.

• Tax Deduction – Tax deductions are expenses that reduce the amount of your income that can be taxed. This can include things like medical expenses that aren’t covered by insurance.

• Tax Penalty – Under the Affordable Care Act, anyone who is not enrolled in a health insurance program by January 1, 2014 will receive a tax penalty, except for those who are exempt.  There is no penalty for a single gap in coverage of less than 3 months.

Rest assured that TurboTax is always up to date with the latest tax laws, and we’re here to help you get your maximum tax refund.

If you still have questions, give us a call to speak with one of our experienced TurboTax professionals. Only TurboTax lets you talk to CPAs, enrolled agents and tax attorneys while you prepare your tax return, free.

2014 is the first year the health care reform law requires you to have health insurance coverage. Most individuals who do not have health insurance will owe a penalty, to be collected by the IRS via your tax return. The penalty starts at $95 in 2014 and increases to $325 in 2015 and to $695 per person by 2016.

On the bright side, individuals who purchase insurance through a health insurance Exchange will be eligible for a tax credit claimed on their 2014 taxes. In order to receive the tax credit for purchasing health insurance from an exchange, you must file a 2014 tax return.

People who have insurance provided by their employer may see that information reported on their W-2 in box 12. If your 2012 W-2 includes this information, don’t worry.  This is for reporting purposes only and does not impact your taxes.

Health insurance exchanges and employers will report information about health insurance coverage to the IRS, so you won’t have to worry about it. In 2014, this reporting requirement will help the IRS figure out if you are eligible for the tax credit in 2014.

You can be sure that TurboTax will be up-to-date with all these healthcare law changes. We’ll let you know what you need to do in the future to help you keep more of your hard earned money.

And if you have questions, call us and an experienced TurboTax tax pro will answer your questions and help you get started on your return. Only TurboTax lets you talk to CPAs, enrolled agents and tax attorneys while you prepare your return, free.

At TurboTax, we’re here for you every step of the way so we’ve got the basic facts that you need to know.

What is health care reform?

Today, there are an estimated 48 million Americans without health care coverage. The Affordable Care Act, or health care reform, is designed to provide cost-effective health insurance to those who are uninsured.

Health care reform includes a new tax credit for an estimated 20 million low-to-middle income Americans. The tax credit will help people purchase affordable health care who otherwise would be unable to afford it.

Here’s what you need to know right now:

• The requirement to purchase healthcare does not impact your 2012 tax return. Phew! You don’t need to do anything right now.

• But you should know that your 2012 tax return will help determine your eligibility for an insurance subsidy from the government, which will help you purchase health insurance under the health care law..

• When you file your 2013 tax return you still don’t need to do anything.  The requirement to purchase healthcare does not impact your 2013 tax return.

• Beginning in Oct. 2013, uninsured Americans will be able to enroll in a health plan through state and federal exchanges.

• In 2014 everyone, except for a few, will be required to purchase health insurance or face a tax penalty.

There are a few groups of people who will not be required to get health care coverage or pay a penalty. This includes those with income below the IRS requirements for filing taxes, those who qualify for religious exemptions, and members of Indian tribes.

You can rest assured that TurboTax is always up-to-date with the latest tax laws. We’ll let you know what you need to do in the future to help you keep more of your hard earned money.

And if you have questions, call us and an experienced TurboTax tax pro will take care of you. Only TurboTax lets you talk to CPAs, enrolled agents and tax attorneys while you prepare your tax return, free.

What do you call it when a blogger sits down to write a post titled, “Shedding Holiday Pounds” alongside a big bag of tortilla chips?

On second thought, don’t answer that.

I’ll ask you another question instead:  What do you call it when you learn of a financial incentive to do something you kind of know you ought to be doing anyway?

Exactly – a no-brainer.

Shedding Pounds

If you need to lose weight, many of your expenses helping you to do so may be tax deductible. But, since it’s taxes we’re talking about, it’s not as simple as, “Deduct all of your weight loss expenses.”  There are a few hurdles you have to overcome to reduce your tax burden.

Key Requirements to Deduct Weight Loss Expenses

Remember when you needed a doctor’s note to get away with something?  Same deal for the weight loss tax deduction.  In order for the tax deduction to be available for you, losing weight is something the doctor has to tell you need to do.  Your doc needs a good reason, too. He or she can’t just provide you a generalized recommendation along the lines of a reminder to wear your seat belt.  Instead, your doctor must recommend, in writing, that you lose weight to help something critical to your health. Once you have the note, you’re on the way to a medical expense deduction.

What Weight Loss Expenses Are Deductible?

Let’s get the fun stuff out of the way first. Gym memberships, healthy food, and a treadmill are not deductible expenses.  Neither are vitamins or herbal supplements.  On the other hand, you may deduct meetings with a nutritionist, other related doctor’s appointments, the cost of weight loss programs, prescription weight loss drugs, and even the cost of gastric bypass surgery as long as the expenses are related to the diagnosis, cure, mitigation, treatment, or prevention of disease.

What Else Should You Consider?

Qualifying weight loss costs are deductible as medical expenses.  Due to their nature, such expenses are therefore  tax deductible to the extent that all of them exceed 7.5% of your adjusted gross income and you itemize your tax deductions.  After December 31, 2012 your expenses will need to exceed your adjusted gross income by 10%.  If you’re not sure if you can itemize, TurboTax will ask you simple questions and determine if you are eligible.   If you won’t be able to itemize, consider using your workplace flexible spending account to save on your weight loss expenses.

Not too much since Americans have until 2014 to take action if they do not have health insurance and those who have insurance will not be impacted at all.

Affordable Care Act

To make things more clear for you and relieve any angst you may have about the ruling and how it relates to taxes, I have outlined the mandate’s two key provisions:

• One provision requires most Americans to obtain minimum health insurance coverage by 2014 or pay a penalty when tax year 2014 taxes are filed.
• The other provision is a Medicaid expansion, which gives funds to states who provide specified healthcare to all citizens whose income falls below certain limits.

Many other provisions have already gone into effect such as reductions in seniors’ prescription drug costs, help for children and some adults with preexisting conditions, and allowing children up to age 26 to remain on their parents’ health insurance.

So far there aren’t any other new details regarding the health care mandate, but rest assured you don’t have to worry about including anything related to this ruling on your 2012 or even 2013 taxes and we will continue to keep you informed and up to date with all of the latest information on this topic.

What is a tan?

When your skin gets darker.

No, I mean for purposes of the tanning tax, what’s a tax?

The health care reform package created several new taxes, many of which phase in over time. However, the tanning tax became effective immediately, back in 2010.  Here are the answers to some frequently asked questions about the tanning tax.

According to the IRS, a taxable indoor tanning service is a “service employing any electronic product designed to incorporate one or more ultraviolet lamps intended for the irradiation of an individual by ultraviolet radiation, with wavelengths in air between 200 and 400 nanometers, to induce skin tanning.”

Are there any tans, tanning services, or tanning products which are exempt from the tax?

Phototherapy is exempt from the tax if it is performed by a licensed medical professional.  Phototherapy is done in the treatment of a specific list of diagnoses including seasonal affective disorder, neonatal jaundice, and sleep disorders.  To be exempt from the tanning tax, the phototherapy must be performed at the professional’s office – it can’t be done at your home or any other location.

In addition, there is no tanning tax on spray tans or suntan lotions (but you’ll probably pay your regular state and/or local sales tax on the purchase).

There is some good news. There’s still no tax for tans earned the old-fashioned way–at the beach.  Not yet, anyway.

How much is the tanning tax?

The tanning tax is 10% of the amount charged for the tan.  So if you pay $25 for a tanning service, the tax is 10% of $25, or $2.50.

How do you pay the tanning tax?

Similar to a sales tax, you pay the tax at the time you buy the service.  The tanning tax simply increases the amount you owe for the tan.

What if I wasn’t charged the tanning tax?

It’s possible that the salon owner decided to include the tanning tax in the price you paid for your tan.  Regardless, the tanning tax will be ultimately paid to the IRS by the tanning salon owner; you, as the individual recently bronzed, have no responsibility for this tax after you walk out of the building.

Why is there a tanning tax?

The tanning tax was created for two commonly stated reasons. First, to provide additional revenue to the government for the specific purposes of paying for health care reform. Second, to provide a negative incentive (didn’t burn the “New Jersey Tanning Mom”) for the use of tanning salons, as there have been studies showing their use has long-term harmful health consequences.  Of course, these two goals work against each other somewhat; since the use of tanning has gone down somewhat due its increased cost, the amount of revenue raised for health care reform has fallen quite short of budget estimates.

Will the tanning tax be repealed?

Although there have been efforts to repeal the tax, repeal’s near-term passage is quite unlikely given our divided Congress. Of course, should the U.S. Supreme Court find the Health Care Reform Act unconstitutional, one possibility is that it would throw out the entire law, presumably including the tanning tax.

Happy summer!

W-2 Form

This year you may find something different on your form. The new health care legislation, the Affordable Care Act, requires employers to report the cost of your employee coverage under your employer-sponsored group health care plan on the W-2 they issue to you. Though optional for 2011 W-2s, these reporting requirements will become mandatory for employers with 250 employees or more in 2012 and become mandatory for all employers beginning with 2013 W-2s.

You’ll find such benefits reported in Box 12 of the Form W-2, identified by the Code DD. If you see health care insurance costs reported on your W-2 this year, don’t panic. Just because the information appears on your W-2 doesn’t mean it is taxable to you. These benefits have always been tax-free, and still remain tax-free under the health care legislation. The information is there so you can better understand the cost of the health insurance benefit you receive through your employment.

The health care coverage costs reported to you will not include the cost of long-term care coverage, accident or disability income insurance, liability insurance, worker’s compensation benefits, or other plans for which medical care benefits are incidental to other benefits. If your dental and vision coverage is under a stand-alone plan not connected to the major medical plan, those costs are also excluded from reporting.

Here are some more tips for reviewing your W-2:

• Notify your employer if your social security number is wrong in Block A, and ask your employer to issue you a corrected form. Don’t try to change it yourself – your employer must send a correct copy to the government for the change to be effective.

•  Compare the figures in Boxes 1 (federal wages), 2 (federal income tax withheld), 16 (state wages) and 17 (state income tax withheld) to the figures on your final paycheck. Don’t assume your W-2 is correct – employers can make mistakes.

•  If your employer paid for your moving costs during the year, review  Box 1 to see if those payments are included there. If your employer included your moving expense reimbursement in income, be sure and claim your moving deduction on your tax return. Skip this step and you’ll be overpaying your income taxes by missing an important deduction.  TurboTax will guide you through deducting these expenses.

• Check the figure in Box 4 if you made more than $106,800 in 2011.  This is especially important if you had more than one employer in 2011. The maximum social security that should have been withheld from your paycheck in 2011 is $4,485.60 (4.2% times $106,800).  If more than that was taken out for Social Security taxes from your combined employers, you may claim the excess withholding as a credit on your income tax return.

• Read Box 13 to see if “statutory employee” is checked. If it is, you must report your wages for this W-2 on Schedule C of your Form 1040.

• If you didn’t receive your W-2 form by mid-February, contact your employer. If the employer refuses to provide the W-2 to you, contact the IRS at 1-800-829-1040 with the employers name, address, telephone number and employer ID number, if you know it. If you still can’t get a W-2 form, file Substitute W-2 Form, based on your final pay stub from that employer for 2011.

Knowing how to read a Form W-2 can help you understand your salary, and also help you get a head-start when preparing your taxes.

Use of 1099s Expanded in 2012

Starting in 2012, business owners will see the use of 1099 forms increase as they conduct their work as usual. As of right now, U.S. tax law requires businesses to complete and submit every year a 1099 for contractors paid at least $600 for services. The new 1099 requirement will apply to corporations (non-tax-exempt) in 2012; it had already applied to non-corporate taxpayers.

In 2012, the law will expand 1099 requirements to include corporations and individuals. It also includes a provision that a 1099 must be submitted to the IRS for both services rendered and goods bought costing $600 or more during the year.

There are two ways to look at this new provision and how it will affect businesses and taxes. Either way, this change with 1099s will come with more documentation.

More Documentation, More Compliance

Some people, including an aide in the Senate Finance committee , see this as an opportunity to provide some revenue without raising taxes. It is certainly a way to encourage business owners to keep better and more detailed records of their transactions. This change can help increase revenue as businesses report income and expenses more accurately.

As of right now, small businesses tally up receipts for business expenses and include them on their tax returns. With more documentation, this provision may help cut down on fraudulent business expenses being submitted to the IRS, which will hopefully mean an increase in revenue received.

More Documentations, More Headaches

For some businesses, this could be a burdensome requirement, adding a huge amount of paperwork. Looking at the wording of the new provision, businesses will have to get tax identification numbers from everyone- vendors, independent contractors, and companies to be able to comply. This expansion can include hotel stays and gas station fill-ups, which will need 1099s for each supplier.

IRS Regulation

How will section 9006 be implemented come tax time? The IRS will release regulations on the new law some time in the next year and we’ll see if any exclusions will be made for business owners.

Bo-Tax to Tanning Tax

Interestingly, an earlier version of the Health Care Reform Billl included a 5% tax on cosmetic surgery that was dubbed ‘Bo-tax’. A proposal by the American Academy of Dermatology to several senators to switch the tax on tanning salon services was given as a win-win scenario. One immediate benefit would be to raise some revenue for the Health Care Reform Billl. Some also see this as an opportunity to deter people from using tanning salons, much like the cigarette tax has swayed some to reduce their habits. It’s been reported that indoor tanning can increase melanoma.

Who is Impacted?

The main question on many people’s mind with this new tax is, how will this effect me? Each day an average of approximately 1 million Americans visit their tanning salons can expect to pay more for their tanning services. For some businesses this can affect their bottom line quite a bit. Having this tax is happening the worst time as many customers are already watching their wallets.

For others, though, it’s simply an item on their budget they’re going to have to adjust.  How do you feel about the new tax? Will it change your indoor tanning habits?