The health care reform law passed in 2010 included a provision that would require employers of 50 or more full-time employees to provide affordable health insurance to their workers or face steep penalties. That provision was scheduled to take effect January 1, 2014.

The Treasury Department has announced that the effective date of this provision will be postponed for one year. The mandatory employer and insurer reporting requirements and any penalties connected with them will be delayed in order to allow more time for companies to adapt to meet the requirements.

In a “2013 Summertime Tax Tip,” the IRS reminded taxpayers about the current rules on home sales. Here’s a quick review of those rules.

Tax Free Home Sale
The tax law allows the majority of taxpayers who sell their homes to enjoy 100% tax-free profit from the sale.

If you have owned and used your home as your principal residence for at least two of the five years preceding the sale, you may exclude from income tax up to $250,000 of profit if you’re single or up to $500,000 if you’re married filing jointly. Generally, the exclusion may be used only once every two years.

The law provides that married individuals may exclude up to $500,000 of profits if:
* either spouse owned the home for at least two of the five years before the sale,
* both spouses used the home as a principal residence for at least two of the five years before the sale, and
* neither spouse is ineligible for the exclusion because of the once-every-two-year limit. If one spouse cannot use the exclusion because of the once-every-two-year rule, the other spouse may still claim the exclusion if he or she qualifies. However, the exclusion then cannot exceed $250,000.

Meet the Requirements
The law does contain some relief for those taxpayers who cannot meet the ownership and use rules or who have already excluded gain on a home sale within the two-year limit. If the failure to meet either rule is due to a job change, health problems, or certain other unforeseen circumstances, a partial exclusion may be available. The partial exclusion is calculated based on the fraction of the two years that the requirements were met.

The IRS reminds homeowners that if all the gain in their home sale is excludable under the rules above, they probably don’t need to report the sale on their tax return. Only one home sale per two-year period can be excluded, and only a taxpayer’s main home qualifies for an exclusion. If a taxpayer has two homes and lives in both of them, the main home is usually the one lived in most of the time.

If you have questions about the tax consequences of your home sale, contact our office

It turns out you can go back after all – at least when it comes to last year’s decision to convert your traditional IRA to a Roth. The question is, do you want to?

You might, if your circumstances have changed. For example, say the value of the assets in your new Roth account is currently less than when you made the conversion. Changing your mind could save tax dollars.

Recharacterizing your Roth conversion lets you go back in time, as if the conversion never happened. You’ll have to act soon, though, because the window for undoing a 2012 Roth conversion closes October 15, 2013.

Before that date, you have the opportunity to undo all or part of last year’s conversion. After October 15, you can change your mind once more and put the money back in a Roth. That might be a good choice when you’re recharacterizing because of a reduction in the value of the account. Just remember you’ll have to wait at least 30 days to convert again.

Give us a call for information on Roth recharacterization rules. We’ll help you figure out if going back is a good idea.

Review your tax deductions for 2013 while there’s still time to manage them for a lower tax bill this year. The standard deduction for 2013 is $12,200 for married couples filing a joint return and $6,100 for single taxpayers. If your deductions are close to the threshold, consider accelerating deductible expenses. For example, you can add sales tax paid on a new vehicle to the IRS standard amount when claiming the itemized deduction for state and local sales tax.

If you’re one of the millions of taxpayers who’ve moved recently, don’t forget to notify the IRS of your address change. Use “Form 8822, Change of Address,” or send written notification to the IRS center where you file your return. Include your full name, old and new addresses, social security number, and signature. If you filed a joint return, include this information for both taxpayers. Keeping the IRS informed of your current address will ensure that you receive notices and refunds without delay.

Check the tax savings of combining business and pleasure on the same trip this summer. Within theU.S., if the primary purpose of the trip is business and you add on a side trip or an extra few days for pleasure, you can deduct all the travel costs to and from your business destination and all other business-related costs. You can’t deduct costs related to the pleasure portion.

Three important birthdays affect your retirement plan:

* At age 50, you can make extra “catch-up” contributions to your IRA and 401(k) savings. For 2013, these are $1,000 and $5,500, respectively.

* After age 59½, you’re eligible to make penalty-free withdrawals from your IRAs.

* Beginning no later than the year after you reach age 70½, you’re required to take minimum distributions from your traditional IRAs each year.

Need more details? Contact our office.

Whether you’re a stock market bull or bear, you have investment expenses – and you may be wondering if they’re deductible on your federal income tax return.

Here’s a quick review.

* What are investment expenses? Investment expenses are amounts you pay to produce or collect taxable income, or to manage, conserve, or maintain your investments.

Professional investment advice or financial newspaper subscriptions are examples of deductible items, as is safe deposit box rent when you use the box to store investment papers. You can also claim fees you incur for replacing stock certificates.

* How much is deductible? Investment expenses are miscellaneous itemized deductions, meaning your total costs generally have to be greater than 2% of your adjusted gross income before you benefit. Other limits may also apply.

* What isn’t deductible? Some investment costs, such as broker’s commissions for buying and selling stocks, are considered part of your basis and affect your gain or loss when you sell the investment instead of being currently deductible.

Travel and fees you pay to attend seminars, conventions, or other meetings – including stockholder meetings – are not deductible, nor are expenses related to tax-exempt income.

Other rules govern certain costs related to your investments, such as interest paid on money you borrow to buy stocks.

Please give us a call to discuss investment-related expenses. We’ll be happy to help you get the greatest benefit.

Planning to change employers this year? As you look forward to starting your new job, you’re probably not thinking about taxes. But actions you take now can have an impact next April – and beyond.

Here are three tax-smart tips:

* Roll your retirement plan. You may be tempted to cash out the balance in your employer-sponsored plan, such as a 401(k). But remember that distributions from these plans are generally taxable.

Instead, ask your plan administrator to make a direct rollover to your IRA or another qualified plan. If you’re under age 59½, this decision also avoids the additional 10% penalty on early distributions. Bonus: Your retirement money will continue to grow tax-deferred.

* Adjust your withholding. Assess your overall tax situation before you complete Form W-4 for your new employer. Did you receive severance pay, unemployment compensation, or other taxable income? You might need to increase your withholding to avoid an unexpected tax bill when you file your return.

* Keep track of your job-related expenses. Unreimbursed employment agency fees, résumé preparation costs, and certain travel expenses can be claimed as itemized deductions.

Are you moving at least 50 miles to your new job? You may be able to reduce your income even if you don’t itemize. Eligible moving expenses are an above-the-line deduction.

More tax issues to consider when you change jobs include stock options, employment-related educational expenses, and the sale of your home. Give us a call. We’ll be happy to help you implement tax-saving strategies.

It’s midyear 2013, and if you haven’t thought about your 2013 tax situation yet, it’s time to do so. By now, you should have a good idea of what your 2013 income and deductions will be. There are several very significant tax changes this year, and you need to start planning now if any of them will affect you. Don’t procrastinate or you could end up paying more tax for 2013 than necessary. Contact us to schedule your midyear review.