On February 10, 2014, the Treasury Department issued rules that will allow mid-sized businesses to delay for one year the requirement to provide health insurance for their workers. The rules also offered some relief for larger companies.

Businesses with 50 to 99 employees will now have until January 1, 2016, to provide minimum, affordable health insurance to their employees, or face penalties. Previously, the deadline for meeting this requirement was January 1, 2015.

In order to qualify for this extension, employers must certify that they have not laid off employees in order to come under the 100 employee threshold.

Larger employers – those with 100 or more full-time employees – will be allowed to phase in the required health insurance coverage. These companies won’t owe a penalty under the insurance mandate so long as they offer coverage to at least 70% of their full-time employees by January 1, 2015, and at least 95% by 2016.

If you’re receiving a tax refund this year, the IRS reminds you that you can use it to buy U.S. savings bonds directly from the IRS. Here are the details.

* You may purchase up to $5,000 in U.S. Series I savings bonds.

* The total amount of bonds you purchase must be a multiple of $50. Any refund over the specified bond purchase amount can be deposited in your bank savings account, or you can request a check by mail.

* Bonds will be issued in your name. If you’re married and file a joint return, the bonds will be issued in the names of both spouses.

* The bonds will be sent to you by mail.

* You select this option when filing your 2013 return by using Form 8888, “Direct Deposit of Refund to More Than One Account.”

* Form 8888 gives instructions on selecting this option and specifying the amount of refund you want to use to buy savings bonds.

For additional information about Series I savings bonds, go to www.treasurydirect.gov.

If you can’t file your 2013 tax return by the April 15 deadline, file for an extension to get until October 15, 2014, to file. You can request the extension on paper, by phone, or online. You don’t need to explain why you need more time, but be aware that an extension doesn’t give you more time to pay taxes you owe. To avoid penalty and interest charges, taxes must be paid by April 15.

Watch for details on a new retirement savings account called the myRA. The Treasury Department has been instructed to begin a pilot program for this new savings vehicle by the end of 2014. The myRA (my retirement account), would let workers open individual retirement accounts with as little as $25 that invest in government bonds. Contributions would not be tax-deductible and could be withdrawn at any time without penalty.

You can receive your income tax refund in several ways: (1) direct deposit into a single checking or savings account, (2) direct deposit split into up to three different accounts in up to three different U.S. financial institutions, (3) via a paper check, or (4) purchasing up to $5,000 U.S. Series I savings bonds. Split deposits need not be in equal amounts, though buying savings bonds must be done in multiples of $50. You can’t split your refund between a direct deposit and a paper check. For direct deposits, verify that your financial institution accepts such deposits, and verify account and routing numbers.

If you or a dependent had a name change last year, notify the Social Security Administration before you file your 2013 tax return with the IRS. Why? If the name on your tax return does not match SSA records, the IRS is likely to notify you about the mismatch. Any refund you expected could be delayed. So if marriage, divorce, or child adoption resulted in a name change, file “Form SS-5, Application for a Social Security Card” with the SSA to inform them of the change.

Rules just issued by the Treasury Department give a one-year extension to the health insurance mandate for mid-sized businesses. Companies with 50 to 99 employees will now have until January 1, 2016, to provide health insurance for employees or face penalties. Employers must certify that they have not cut workers in order to come under the 100 employee threshold. Companies with 100 or more employees must still meet the January 1, 2015, deadline for providing health insurance coverage.

Are you considering withdrawing funds from your traditional IRA to pay unexpected medical costs?

You may be hesitating because of the 10% penalty imposed on withdrawals made when you’re under age 59½. Since the 10% is calculated on the total you withdraw, the tax hit could be substantial. Worse, the penalty typically is not withheld from the cash you receive, so you’ll need to come up with the money when you file your tax return.

Fortunately, in some situations you can take penalty-free withdrawals from your IRA for medical expenses.

One example is the medical insurance exception, which applies if you lost your job and have received unemployment compensation for 12 consecutive weeks. IRA withdrawals used to pay medical insurance premiums for yourself, your spouse, or your dependents aren’t subject to the 10% penalty, as long as you take the distributions in the year you receive unemployment (or the year after).

This exception may also be available if you were self-employed and are unable to collect unemployment benefits.

Another exception: You can take penalty-free withdrawals when you incur unreimbursed medical expenses that exceed 10% of your gross income. For instance, say your 2014 gross income is $40,000 and your total unreimbursed deductible medical expenses are $5,000. To determine the penalty-free withdrawal amount of $1,000, multiply $40,000 by 10%, then subtract the result ($4,000) from $5,000.

You don’t have to itemize your deductions to qualify for this exception.

In addition, the penalty does not apply when early IRA withdrawals are due to a permanent, total disability.

For more information about the requirements for these and other exceptions to the 10% early withdrawal penalty, please contact us.

Every week reporters publish stories about companies that have lost thousands, even millions of dollars because of fraud. They recount the dreadful details of business owners who learned – too late – that a lack of basic controls left their companies vulnerable to pilferage, embezzlement, and other types of misappropriation.

How do these lessons apply to small businesses? After all, small firms generally can’t afford to hire internal auditors or set up separate divisions to break up incompatible duties. While it’s true that a small company can’t always protect itself in ways larger firms might, management can establish controls in certain high-risk areas, such as the following:

Cash disbursements. If at all possible, the owner/manager should sign checks. This control has a dual purpose: management sees how the company is spending its money, and the cash disbursement function is kept separate from bookkeeping or accounting. If the same person signs checks and enters disbursement transactions in the accounting records, embezzlement is harder to prevent. Requiring two signatures on checks above a certain amount also provides greater control.

Customer collections. Consider having the owner/manager open the mail, especially if customer collections are a regular part of your business. Alternatively, you might ask someone separate from the accounting function to open the mail and prepare the deposit slip. Of course, the practice of making daily deposits is also a good control.

Personnel practices. By taking care to perform background checks before hiring key employees, especially those who will be handling cash or other high-risk assets, you can prevent problems later on. Of course, financial pressures, addictions, and other factors can corrupt even good employees. That’s why managers might consider discreetly monitoring employee lifestyles (without invading anyone’s privacy, of course). An observant manager might note that certain lower-level employees are living well beyond their means, or that warehouse staff are carrying off company materials to remodel personal residences.

Perhaps a small business’s greatest control is the “tone at the top.” If management sets a high standard, employees generally follow. However, if a manager is perceived as lax – for example, he or she doesn’t respond quickly when evidence of misappropriation surfaces – employees might conclude that theft isn’t such a big deal.

Remember this: A company that fails to establish minimum controls is providing a golden opportunity for fraud. If you’d like help reviewing your firm’s controls, give us a call.

Small businesses may be missing out on an important new tax perk related to health insurance. And the stakes are even higher in 2014.

The Affordable Care Act provides a tax incentive for small business owners who pay at least a portion of their employees’ health insurance. This year as much as 50% (up from 35% in 2013) of the employer’s cost for worker health care premiums can be deducted as a tax credit. That’s a dollar-for-dollar reduction in your 2014 tax bill. But as with most tax deals, you must meet certain requirements to qualify.

First, you must employ fewer than 25 full-time equivalent (FTE) employees. A half-time employee would count as a .5 FTE, so you must consider all workers in your calculation. The fewer FTE employees you have, the higher the tax credit percentage.

Second, the average annual wages of your employees must be less than $50,000. To make the calculation, you would take your total wages and divide by the FTE number you figured above. In most cases the owner’s salary is not included in the formula.

Finally, the business owner must contribute at least 50% of the total cost for single coverage. Family coverage is not factored in. The policy must also be purchased through the Small Business Health Options Program, or SHOP to be eligible for the credit.

A few more wrinkles: if a business doesn’t owe tax for the current year, they can apply the credit to past or future years. In addition, the excess of the employer’s actual cost of health insurance over and above the credit received can still be deducted as a business expense. And the new rules also mean that small nonprofit organizations can receive a tax credit of up to 35% of their health insurance costs if they meet the above requirements.