Hot Tips for Physicians and Medical Professionals in Relations to Tax Reform Bill January 12, 2018 Tag 2418 Courtesy of Vasquez & Company 1) On Nov. 29, 2017, the Senate voted 52 ‐ 48 to begin debate on the tax reform bill clearing the last procedural hurdle. 20 hours of debate and the so‐called "vote‐a‐rama" process began late on the 29th with a vote expected on Dec.1. 2) Health reimbursement arrangements for small businesses, As a reminder, Small businesses may now be able to help cover the cost of employees' expenses for medical care by establishing a qualified small employer health reimbursement arrangement (without incurring penalties under ACA). Legislation was signed in late December 2016 to be effective for 2017. The act overrules the IRS position by defining "group health plan" as not including "any qualified small employer health reimbursement arrangement." Under the act, a qualified small employer HRA must be funded solely by an eligible employer, and there can be no salary reduction contributions under the arrangement. The HRA must provide for the payment of an eligible employee's expenses for medical care (as defined in Sec. 213(d)) that are incurred by the eligible employee or the eligible employee's family members. Finally, the number of payments and reimbursements under the plan for any year cannot exceed $4,950 ($10,000 in the case of an arrangement that also provides for payments or reimbursements for family members of the employee). The act coordinates the new exclusion with the Sec. 36B health insurance premium credit to provide that a qualified small business HRA can provide "affordable coverage," and that a "coverage month" does not include a month in which an employee receives affordable coverage under a qualified small business HRA. 3) Consumer Alerts on Tax Scams Note that the IRS will never: Call to demand immediate payment using a specific payment method such as a prepaid debit card, gift card or wire transfer. Generally, the IRS will first mail you a bill if you owe any taxes. Threaten to immediately bring in local police or other law‐enforcement groups to have you arrested for not paying. Demand that you pay taxes without giving you the opportunity to question or appeal the amount they say you owe. Ask for credit or debit card numbers over the phone. For more information on tax scams, please see Tax Scams/Consumer Alerts. 4) Three key steps to take to protect tax and financial information: Learn to recognize and avoid phishing emails, threatening phone calls and texts from thieves posing as legitimate organizations such as banks, credit card companies and government organizations, including the IRS. Do not click on links or download attachments from unknown or suspicious emails. Always use security software with firewall and anti‐virus protection. Make sure the security software is always turned on and will automatically update. Encrypt sensitive files such as tax records stored on computers. Use strong passwords. Protect personal data. Use strong, unique passwords for each online account. Don't routinely carry Social Security cards, and make sure tax records are secure. Treat personal information like cash; don't leave it lying around. 5) As the end of the year approaches, the IRS encourages taxpayers to consider a tax withholding checkup. When taxpayers take a close look to make sure the right amount of tax is withheld now, they can avoid an unexpected tax bill next year. Here are five examples of taxpayers who would benefit from a withholding check‐up: Taxpayers who received large tax refunds in past years When a taxpayer has too much tax withheld from their paycheck, they pay too much tax during the year. They can change their withholding to have money upfront rather than waiting for a bigger refund. Taxpayers who owed taxes in years past Taxpayers with too little tax withheld might owe money. Under‐withholding can lead to both a tax bill and an additional penalty. People with a second job This includes people who work in the sharing or ‘gig' economy. Taxpayers who work more than one job should check the total amount of taxes they have withheld and make adjustments as necessary. This will ensure their withholding covers the total amount of the taxes they owe, based on their combined income from all their jobs. Taxpayers who make estimated tax payments Some taxpayers make quarterly estimated tax payments throughout the year. This includes self‐employed individuals, partners, and S corporation shareholders. If these taxpayers also work for an employer, they can often forgo making these quarterly payments by instead having more tax taken out of their pay. People with a new job Taxpayers who start a new job should check their withholding to make sure they are having enough taxes withheld. Their total withholding should cover the income tax owed from their new and old jobs combined. To make sure their employer withholds the right amount of tax, employees can adjust their Form W‐4, Employee's Withholding Allowance Certificate. In many cases, this is all they need to do. The employer uses the form to figure the amount of federal income tax to be withheld from pay. This takes time, so taxpayers should make adjustments as soon as possible so the changes can take effect during the final pay periods of 2017. (Sources: AICPA Tax Section and IRS Website)