Tax Talk

November and December are open season for most health insurance plans. It is important to consider now whether you need to cover your young adult in your family plan. Your employer should notify you of open season for the employer plan. If your employer does not offer a plan or you do not have insurance for you or your family you can apply to Marketplace. You generally must apply during open enrollment. Click here to apply during open enrollment if you are in Kentucky: KY Marketplace KYnect . *

If you lost employer insurance, check to see if you qualify for a special enrollment. For more information concerning who qualifies for special enrollment click here: Special Enrollment Period

Many parents may be worried about how they are going to pay for health insurance for their young adult in 2021. Obamacare [the ACA] is still to the rescue! Did you know that if you have a family plan or if your employer-provided health insurance has a family option, you can cover kids up to age 26. This is true regardless of whether that “kid” is still at home or not.

A young adults can join, remain, or return to a parent’s plan even if:

>married
>not living with the parents
>attending school
>financially independent
>eligible to enroll in their own employer’s plan.

If the young adults child turns 26 during the year, coverage might end on on the day they turn 26 under some employer plans, but check with the employer. If it does, the young adult qualifies for a special enrollment period at the Kentucky Marketplace. Click here: KYnect.

For more information see: YOUNG ADULT COVERAGE.

CIRCULAR 230 DISCLOSURE: To ensure compliance with the requirements imposed by the IRS, we inform you that, to the extent this communication addresses any tax matter, it was not written to be (and may not be) relied upon to (i) avoid tax-related penalties imposed under the Internal Revenue Code, or (ii) promote, market or recommend to another party any transaction or matter addressed herein. Likewise, nothing herein is intended to convey an expression of an opinion as to the likelihood a tax position would ultimately prevail if challenged by the IRS.

*KYnect open season for 2021 runs from November 1 through December 15.

[reviewed and updated 11/16/2020]

Where are you? Where is East Street? I’m on East Street, but I don’t see 116? Is East Street one way? Where do I park?

These are all questions we hear frequently. And we would like to help you out BEFORE you get lost.

We are located at 116 S. East Street.

East Street runs along the railroad tracks in Harrodsburg. If you are coming from US Highway 127, you will go east on Lexington Street (US Highway 68) and swing a right just BEFORE you cross the tracks. But if you are coming from Lexington on US Highway 68, you will take a left just AFTER crossing the tracks.

Corner of Hwy 68 & S. East Street

This historic two-story home sets at the corner of Lexington Street and S. East Street.

If you are on East Street but do not see 116, you are likely on NORTH East Street. North East Street also runs along the tracks but on the opposite of the tracks from SOUTH East Street. Just come south, cross the railroad tracks at US Highway 68, and you will see us right away.

Believe it or not East Street is a two-way street, at least for now. It really causes little problem because the one-lane portion is very short.

Once at the office, you may park in either drive. Yes, it appears that we do not have much parking. But the truth is we do not double book. There is additional parking if needed. But your scheduled time is just for you. In a sense, you have “reserve” parking.

But, please, do not park in the road. It is only one lane and the police insure that it is kept clear. Take advantage of your “reserve” parking, instead.

We look forward to seeing you.

Great question! A tax credit lowers your tax bill dollar for dollar. If it is a refundable credit, such as the Earned Income Credit and the Hope education credit, it can also result in a refund when you owe no tax. The deduction reduces your taxable income, which is amount on which you pay taxes. Its value depends on your tax bracket. If you are in the 10% tax bracket, a $1000 deduction saves you $100. But a $1000 credit could save you $1000, no matter what tax bracket you are in. And a $1000 refundable tax credit would result in a $1000 refund, even when you owe no taxes and had no withholding.

One of the best places to see these distinctions in practice is by comparing the current tax breaks for paying college tuition. There are currently three types of tax breaks, a tuition deduction, a Hope credit and a life-long learning credit. The tuition deduction reduces taxable income, the life-long learning credit reduces tax, but the Hope credit is a credit with a refundable feature.
Let’s assume we have a student, single, who in 2011 made $20,000 in wages and paid $6,000 in college tuition. For clarity, let’s assume he had no tax withhold on these wages. Remember, the student is out $6000 in each of these scenarios. Here are the differing results:
Tuition Deduction: Owes $653
Life-long learning credit: Owes $0; Refund $0
Hope Credit (a refundable credit), even though no income tax was withheld from the wages: $1000 refund
As you can see, the credit results in $1653 less tax on the same $6000 outlay. If the student had earned $22,250, the tax would have been $1900 less with the refundable credit.

The Loving case is not so loving. Competent income tax preparers are disappointed. The taxpaying public will be the losers.

Starting in 2011, the IRS began its return preparer oversight initiative. The purpose of this initiative was to help insure that income tax preparers who charge for their services were competent to perform these services.

In the first phase, the IRS required all paid tax preparers to obtain a preparer tax identification number (PTIN), subject to some exceptions. This was to be renewed annually. The next phase was to require all paid preparers who prepare individual income tax returns to complete a IRS tax filing review and successfully pass the registered tax return preparer (RTRP) competency exam. RTRPs also must obtain 15 hours of continuing education annually from IRS-provided providers.

After the IRS launched this initiative, the Institute for Justice, a public interest group, representing three unenrolled return preparers, challenged the new rules in federal court.

Court’s Opinion:
The U.S. District Court for the District of Columbia ruled in favor of the unenrolled return preparers (Loving v. Internal Revenue Service, D. D.C., 2013-1 USTC ¶50,156). It has stopped the IRS from moving forward with its return preparer oversight initiative.

IRS Responded:
After the decision, the IRS stated that “[i]n accordance with [the injunction], tax return preparers covered by this program are not currently required to register with the IRS, to complete competency testing or secure continuing education.”

Others Comment:
According to a report from CCH, “The National Society of Accountants (NSA) is disappointed,” said John Ams, executive vice president. “NSA has long supported the registration of paid preparers and continuing education requirements so that preparers have the up-to-date knowledge needed to prepare complete and accurate tax returns for their clients.”

The CPAs and staff of Conover & Conover, CPAs, PSC, agree with the NSA. We believe that taxpayers deserve to know that those who charge to prepare an income tax return are competent to prepare the return. Taxation is part of the uniform CPA exam that all CPAs have passed and CPAs in Kentucky are required to have 40 hours of continuing education per year.

[Some of the information presented here was provided by CCH in its Practical Tax Bulletin, 2013, #4]

In 2019, Kentucky Unemployment is paid only on the first $10,500 earned by each worker in the calendar year. The $10,500 is known as the taxable wage base.

Every employer is assigned a rate based on each individual employer’s experience [payments into and claims against the employer’s unemployment account].

The Kentucky Unemployment taxable wage base differs from the Federal Unemployment (FUTA) taxable wage base which remains at $7000.

If you need assistance with your unemployment tax computation, please contact us.

Having worked in the aftermath of various natural disasters as a part of the FEMA/IRS Emergency Response Team and having served as chairman on the local health board, I know the importance of protecting your records in the event of emergency. The Small Business Administration offers monthly webinars to help small businesses be ready in the event of disaster.

Here’s a link to these webinars: http://www.preparemybusiness.org/education

Imagine how your business would run if you suddenly lost all your records.

This is your chance to let us know. If we’ve done something well, please post. If you feel our website need attention, let us know where. If you think we need to address a systemic issue, say so. [But, please do not put personal information here. We will be glad to respond to personal issue, click on the Contact Us link].

A client recently made me aware that there was no place in Tax Talk to ask questions. So here you are. ~

!! Disclaimer: To comply with IRS requirements, please be advised that any tax advice contained in these answers is not intended or written to be used, and cannot be used, by the reader to avoid any federal tax penalty that may be imposed. The reader should seek advice on his specific tax circumstances directly from a competent CPA or other tax preparer. !!

We will be glad to arrange a meeting to discuss your particular circumstances.

This is just a friendly reminder that your Kentucky personal property tax return is due 5/15 of each year and your Kentucky Secretary of State annual filing must be completed by 6/30 of each year.

Need an EXTENSION. Click “Contact”.

March 15

Corporations need form 7004. Go to www.irs.gov/pub/irs-pdf/f7004.pdf.

April 15

Individuals need form 4868. Go to www.irs.gov/pub/irs-pdf/f4868.pdf. Partneships need form 7004. Go to www.irs.gov/pub/irs-pdf/f7004.pdf.

OR call us. We’ll be glad to assist you.

One thing you need to know about Obamacare if you have a kid age 18 – 25 (or if you are that kid).

Finding Conover & Conover CPAs, PSC… We don’t mean to be difficult.

What is the difference between an income tax deduction and a tax credit?

The Loving case is not so loving. The taxpaying public will be the losers.

2019 Kentucky Unemployment Base Wages

Emergency Planning

How are we doing?

Your questions

May 15th is Property Tax Return Deadline

NEED an extension?