Personal finances Archives

A Few Tips on the Affordable Care Act (“Obamacare”) for Individuals

The IRS has published a few tips regarding the Affordable Care Act. An individual shared responsibility provision of the Health Care Law requires you and each member of your family to:

• have qualified health insurance, also called minimum essential coverage,

• have an exemption, or

• make a shared responsibility payment when filing your federal income tax return.

Taxpayers who might qualify for an exemption from having qualifying health coverage and making a payment should review a new IRS publication for information about these exemptions. Publication 5172, Health Coverage Exemptions, which includes information about how you get an exemption, is available on IRS.gov/aca.

The Affordable Care Act calls for each individual to have qualifying health insurance coverage for each month of the year, have an exemption, or make an individual shared responsibility payment when filing his or her federal income tax return.

If you and your family need to acquire minimum essential coverage, you may have several options. They include:

Health insurance coverage provided by your employer,
Health insurance purchased through the Health Insurance Marketplace in the area where you live, where you may qualify for financial assistance,
Coverage provided under a government-sponsored program for which you are eligible (including Medicare, Medicaid, and health care programs for veterans),
Health insurance purchased directly from an insurance company, and
Other health insurance coverage that is recognized by the Department of Health & Human Services as minimum essential coverage.

You may be exempt if you:

Have no affordable coverage options because the minimum amount you must pay for the annual premiums is more than eight percent of your household income,
Have a gap in coverage for less than three consecutive months, or
Qualify for an exemption for one of several other reasons, including having a hardship that prevents you from obtaining coverage or belonging to a group explicitly exempt from the requirement.

On IRS.gov/ACA, you can find a comprehensive list of the coverage exemptions.

How you get an exemption depends upon the type of exemption. You can obtain some exemptions only from the Marketplace in the area where you live, others only from the IRS when you file your income tax return, and others from either the Marketplace or the IRS.

Additional information about exemptions is available on the Individual Shared Responsibility Provision web page on IRS.gov. The page includes a link to a chart that shows the types of exemptions available and how to claim them. For additional information about how to get exemptions that may be granted by the Marketplace, visit HealthCare.gov/exemptions.

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IRS CIRCULAR 230 DISCLAIMER: To ensure compliance with requirements imposed by the U.S. Department of the Treasury and Internal Revenue Service, we inform you that any tax advice contained in this e-mail (including any attachments) is not intended or written to be used, and may not be used, for the purpose of (a) avoiding penalties under the Internal Revenue Code or state tax authority, or (b) promoting, marketing, or recommending to another party any transaction or matter addressed herein. Any accounting, business or tax advice contained in this communication, including attachments and enclosures, is not intended as a thorough, in-depth analysis of specific issues, nor a substitute for a formal opinion, nor is it sufficient to avoid tax-related penalties. If desired, (Firm) would be pleased to perform the requisite research and provide you with a detailed written analysis. Such an engagement may be the subject of a separate engagement letter that would define the scope and limits of the desired consultation services.

CPA Tip: Do You Qualify for a Health Insurance Coverage Exemption?

Our nation has been on an information roller coaster with the Affordable Care Act. Businesses, individuals, and even insurance agents have reeled from the information gap.

Before calling your insurance agent, brush up on health care insurance eligibility provided by the IRS, below. It is a good start to understanding your healthcare obligations.

The Affordable Care Act calls for individuals to have qualifying health insurance coverage for each month of the year, have an exemption, or make a shared responsibility payment when filing his or her federal income tax return.

You may be exempt from the requirement to maintain qualifying health insurance coverage, called minimum essential coverage, and may not have to make a shared responsibility payment when you file your next federal income tax return. .

You may be exempt if you:

Have no affordable coverage options because the minimum amount you must pay for the annual premiums is more than eight percent of your household income,
Have a gap in coverage for less than three consecutive months, or
Qualify for an exemption for one of several other reasons, including having a hardship that prevents you from obtaining coverage or belonging to a group explicitly exempt from the requirement.

The IRS website, IRS.gov/aca, has a comprehensive list of the coverage exemptions.

How you get an exemption depends upon the type of exemption. You can obtain some exemptions only from the Marketplace in the area where you live, others only from the IRS, and yet others from either the Marketplace or the IRS.

Additional information about exemptions is available on the Individual Shared Responsibility Provision web page on IRS.gov. The page includes a link to a chart that shows the types of exemptions available and whether they must be granted by the Marketplace, claimed on an income tax return filed with the IRS, or by either the Marketplace or the IRS. For additional information about how to get exemptions that may be granted by the Marketplace, visit HealthCare.gov/exemptions

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IRS CIRCULAR 230 NOTICE: To ensure compliance with requirements imposed by the U.S. Department of the Treasury and Internal Revenue Service, we inform you that any tax advice contained in this e-mail (including any attachments) is not intended or written to be used, and may not be used, for the purpose of (a) avoiding penalties under the Internal Revenue Code or state tax authority, or (b) promoting, marketing, or recommending to another party any transaction or matter addressed herein.

Healthcare Deadline: An (Un)necessary evil, or a Milestone in History? Either way it’s the Law

Health Care Law Considerations for 2014 and the March 31 Deadline

Here is some advice from the IRS that may help.

For most people, the Affordable Care Act has no effect on the 2013 income tax return they are filing in 2014. However, some people may need to make important decisions by the March 31, 2014 deadline for open enrollment.

Below are five things about the health care law you may need to consider soon.

• Currently Insured – No Change: If you already insured, you do not need to do anything more than continue your insurance.

• Uninsured – Enroll by March 31: The open enrollment period to purchase health care coverage through the Health Insurance Marketplace for 2014 runs through March 31, 2014. When you get health insurance through the marketplace, you may be able to get advance payments of the premium tax credit that will immediately help lower your monthly premium. Learn more at HealthCare.gov.

• Premium Tax Credit To Lower Your Monthly Premium: If you get insurance through the Marketplace, you may be eligible to claim the premium tax credit. You can elect to have advance payments of the tax credit sent directly to your insurer during 2014 so that the monthly premium you pay is lower, or wait to claim the credit when you file your tax return in 2015. If you choose to have advance payments sent to your insurer, you will have to reconcile the payments on your 2014 tax return, which will be filed in 2015. If you’re already receiving advance payments of the credit, you need to do nothing at this time unless you have a change in circumstance like a change in income or family size. Learn More.

• Change in Circumstances: If you’re receiving advance payments of the premium tax credit to help pay for your insurance coverage, you should report life changes, such as income, marital status or family size changes, to the Marketplace. Reporting changes will help to make sure you have the right coverage and are getting the proper amount of advance payments of the premium tax credit.

• Individual Shared Responsibility Payment: Starting January 2014, you and your family have been required to have health care coverage or have an exemption from coverage. Most people already have qualifying health care coverage. These individuals will not need to do anything more than maintain that coverage throughout 2014. If you can afford coverage but decide not to buy it and remain uninsured, you may have to make an individual shared responsibility payment when you file your 2014 tax return in 2015. Learn More.

More Information

Find out more tax-related provisions of the health care law at IRS.gov/aca.

Find out more about the Health Insurance Marketplace at HealthCare.gov.

Financial Rhabarberbarbar (“Rubarb Barbara” in German) and How to Navigate the Financial World’s Terminology

Do financial terms seem like another language to you? Check out this link for a little play on German words for a real brain-teaser https://www.youtube.com/watch?v=gG62zay3kck .

If you struggle with financial terms, and don’t have time to take business classes, there are some resources that you can grab quickly.

Investopedia: www.investopedia.com/dictionary. This site explains a wide range of business terms if you are looking for a quick definition. It is organized alphabetically for easy research.
Business Dictionary: www.businessdictionary.com. This dictionary carries more weight than just a list. It also displays terms as used in certain financial areas.
Periodical and Media Sources: Popular periodicals also have joined the group of educating the public. www.theguardian.com/business/glossaryatoz. www.washingtonpost.com/wp-dyn/business/specials/glossary/index.html www.money.cnn.com/services/glossary/a.html just to name a few.
Desktop Table Books: There are books that write about terms and concepts in more depth. The Book on Business from A to Z, The 260 Most Important Answers You Need To Know, speaks about different concepts from Accounting to Z-Score. (I wrote the chapter on Accounting). This book, like others, is also available as E-books.

These sources can help you understand terms and concepts, so you can ask more intelligent questions in your personal and business transactions.

So in business, just as in movies, don’t be ignorant of terminology. I had to check “Never rub another man’s rhubarb!” said by Jack Nicholson as the “Joker” in Batman.

Are there Too Many People Between You and Your Fans(or Clients)?

I stumbled across this article, There’s No Long Tail on Hypebot.com. The article mostly bored me until I got to the last paragraph regarding business. It stated, “The way the [music] industry is structured today there are too many people and organizations between the artist and the fan, which has the result of increasing the numbers of marginal businesses where the income is spread too thinly.”

Though this may be true in many cases, in the internet business world of today, the concept of the middle man is going the way of the cassett tape. Back in the 1980’s a band needed a record company (consisting of an army of persons), a promoter, a personal manager, a business manager, a tour manager, a publicist, etc., just to have a chance of being heard by their fans. A frustrating thought, unless you compare the record business to my father’s day in the 1950’s. He (Bobby Norris) signed as a Rockabilly vocalist with Capitol Records, and couldn’t even get substantial airplay without paying the stations “payolla.” (Ironically, today, eight years after his death, his records are in a Capitol Records Rockabilly album, and are playing, and sold on the internet.)

The way of the middle man, as we know it will deminish in some business industries (like music), and surface in other business industries like mobile apps. In regards to your business and industry, what role will a middle man play? Social networking and search engine optomization(SEO) has played an important role, but will the SEO business industry be edged out as more people use their apps to find information (like Yelp!) instead of Google?

So, what should you do? First, in your industry, take a step back and see what your fanbase or customer is looking for? Are they looking for more fireworks on stage like KISS, or a band that can act as a bellweather, like the Beatles, in a changing culture? Are you just following the pack, or is there another way to get to your fan (or clients) that others have not addressed. Don’t follow the flow. Have the flow follow you. Second, find your blue ocean and make your competition irrelevant.

Is Your Viral Strategy Becoming Obsolete?

A little while ago, I wrote an blog that borrowed a quote from from Wayne Gretsky, who said he is successful because he skated to where the puck was going to be, not where was is at. Now, a recent study makes a claim that can affect every business that uses Search Engine Optimization methods. Currently, businesses use various methods to increase their visability on search engines. Some of these tactics include the expensive “pay-per-click.”

The article, Consumers under 35 Ditching Browsers for Apps, disusses a recent study that millennials choose mobile apps over search engines. However, before you fire your SEO consultant, read the article closely. The survey question was not asked properly to arrive at this conclusion.

Still, notwithstanding the article’s basic point, there is a bellwether here. In certain situations, the Mobile App may be the only viable tool for web search. When you are looking for a Starbucks in the car, would you use Yelp! or Google? Most mobile app users I know, at any age, use Yelp! To use Google is way too long and less refined for the area you are searching. This example can be replicated for many situations. The real question is, whether your tactics have been adjusted in light of it. How can your viral strategic plan be implemented as the consumer habits change? Strategic Planning is a circular process. Quantitative results will play a major role (Sales, profit, customer increases), but they must be looked at in context of your strategy, and the every changing landscape.

Business Plans. The greatest of the Great American Novel. (I’ve done both.)

Business Plans. The greatest of the Great American Novel. I should know, I’ve done both.

I came across this timely article A Music Business Plan from Music Think Tank. The author made an honest attempt in trying to simplify a slippery subject while plugging his business plan book. That is OK, I didn’t mind. But, the article really didn’t tell me too much. The example he displayed was what I call a Red Ocean business. In other words, using the Blue Ocean Strategy theory, his business plan did not render the competition irrelevant.

Irrelevant competition is the goal, not the business plan.

The lack of ingenuity in business plans concern me because the music industry has always been one of the most creative industries. Others are taking a risk and trying to achieve this. See a prior blog where this is happening.

So, instead of telling you how to write a business plan, I will provide some tips on strategies:

Don’t follow the pack. Yes, I know, record companies, literary agents, and Mother Superior want you to follow tried and true practices. You can learn from the past, but you don’t have to repeat it, if it is not working. The music industry is currently searching for a new business model, but until they find one, they’ll keep doing the same things they have always done.
Focus your business plan on what your audience wants, but is not getting. During the 1960’s, is the reason why the Beatles rocketed to fame(beside their great rhythms) is because they portrayed themselves as cultural leaders to a generation that was searching for an identity? Just look at the impact they had on my generation with Helter Skelter, Eleanor Rigby, Hey Jude, Come Together, Revolution, Lucy in the Sky with Diamonds, and many more. Some impacts were positive, others not.
Utilize every talent you have for your business plan. Can you draw? Can you write poetry? How about cook? I don’t know, just take stock of your core competencies and see how they can send your music and strategy in a new direction.

As a professional that writes business plans, I cannot tell you the answer. You have to discover that yourself. My job, is to lead you in this strategy as a sounding board, and then quantify it into something others will understand.

What 12 Year-old would Want “Penny Stock” for Christmas, and Why?

In December 2008, my 12-year old wanted penny stock for Christmas . I never had any luck in investing in penny stock, even with penny stock newsletters. So, my wife and I looked at stock that we may want to buy that wasn’t expensive, but had potential. In March of 2009, we came up with Ford. It was about $5 per share, and the only auto company not borrowing from the U S government. It had a mountain of debt, but we figured the fed’s weren’t going to let the auto industry die. So, in place of a gift, my son received 40 shares of Ford valued at $200. Two weeks ago(2010), he elected to sell his 40 shares (to us) at $17.20. His $200 investment increased to $688.

This is a good, though a little risky gift you can give to your aspiring child, as long as they know the risk of not getting ANY Christmas present. An article in the Wall Street Journal offers some options that you may consider. How to Give Children the Gift of Investing. The gift can be a learning tool for both you and the child, hopefully a profitable one.

In case you are wondering what our son is doing with the money, he is partially investing it in himself. Right now, he is a 14-year old freshman high school water polo player. For this year’s Christmas gift, he wants a personal weight trainer to get him buff before he plays varsity water polo in 2 years. However, the $40 per hour trainer would eat up his money pretty quickly. So, he requested another interesting Christmas gift in 2010. This time, to us and grandma. However, he sweatened the deal and mortgaged his next birthday gift, too. Instead of receiving a Christmas gift in 2010, and a birthday gift in May 2011, he wants grandma, and us, to pitch in 1/3 each, for his weight training. So, he pays 1/3 out of the Ford proceeds, grandma pays 1/3, and we pay 1/3 for the trainer. In return, he doesn’t get any large gift for either Christmas or his next birthday.

So in theory, he will leverage his 2008 Christmas gift Ford proceeds to pay for 40-50 weight training lessons.

Looking at his strategy, he wants to be the strongest kid of his age next year. Combine that with hard work and great grades, there may be a water polo position open for him at the college level in 3 years. Quite an upside for a $200 risk.

Now, he (nor I) know that many things can happen in 3 years, but there are some good lessons here:

Trade meaningless short-term benefits (like material possessions), for long-term goals that may reap benefit far greater.
Really think about what is important to you over the next five years. Is that expensive car really more important than investing in a little more education or training?
Take a little risk, and plan for contingencies, but make sure it is a calculated risk. Don’t blindly walk into anything.
Above all, don’t look back. Don’t dwell on things that don’t work out. Keep moving forward adjusting your strategy as needed.

By the way, at the time I am writing this article, the 40 shares of Ford stock he sold to me at $17.20 is now $15.94 per share.

Budget Time: Managing Your Money During the Next Thirty Days

This time of year brings out a lot of good articles regarding saving money. I found this one in the Wall Street Journal. 7 Smart Holiday Moves for the Holiday This article amplifies what I have suggested for the last year in various articles. The main word to keep in mind is BUDGET. How much can you afford, and not to be burdened by guilt because you did not spend enough money on someones gift. Even though Black Friday has passed, there are still a lot of good deals out there if you start early and look for them. For example, today, I decided to invest in LED Christmas lights. They use far less energy than normal lights. I didn’t want to replace all of my lights at once because of the cost, so I bought 4 boxes. Not only will this save money on electricity, but the exchanging of my normal lights got me a 30% discount at Home Depot. So, I saved money on the purchase, bought within my budget, and will save money on electricity for the next 30 days.

The same can be done for small and medium businesses. Plan and buy smart. Your bottom line will surprise you, not to mention your lower credit card bill in January.

Phone Instead of Your Credit Card To Buy Something? Listen-up Small Businesses?

Hold on to your small business hats, things are moving even faster. Google Inc. Chief Executive Eric Schmidt said Monday that the smart phone will eventually replace the credit card. This may come as a surprise to you, but Bill Gates predicted that and a lot more over 15 years ago in his book, The Road Ahead. This advent of technology will have a lot of challenges to small business. Some of the issues are things like, will a business have to pay any credit card fees for the transaction? Obviously there shouldn’t be one of the merchant charges, because the phone may not be using the small business merchant’s number. What about security? If someone uses a stolen phone, can they access the owner’s bank account to purchase small business merchandise? Will the small business retain the same security as a credit card transaction?

The small and medium sized businesses should be looking at these developments closely, but not just compliance issues. This type of new technology could give a small and medium sized business a competitive advantage over their rivals. How? Let’s assume that these transactions will not impact the small business as much as a credit card transaction. That translates into a savings to the small business, and maybe the consumer.

Or, what about a small business advertising that they accept I-pad credit purchases? That service can bring customers into their establishment. Small and medium sized businesses can process their purchases without high-interest charging credit cards.

Small businesses must look at as many technological advancements as possible and ask the question, “How can this technology create a marketplace where the competition becomes irrelevant?” The small businesses that jumped on the first ATM machines created an edge for a short time. Now, you don’t need them.