October 29, 2014

Health Insurance Marketplace - Exempt Based Upon Hardship

Question:

According to HealthCare.gov, some individuals who don't have a qualified health insurance plan may be exempt from making the individual shared responsibility payment. I was reading the list of exemptions from the penalty, and I noticed one of them was called a hardship exemption.

What is meant by hardship? And what do I have to do in order to qualify for the exemption?

Answer:

Yesterday, we gave an overview of all the exemptions from the fee for not having health care coverage. One of the exemptions we mentioned was based on hardship.

Below are just a few of the circumstances that may qualify you for a hardship exemption. If you would like to know all 14 circumstances of hardship that might qualify an individual to be exempt from the fee, you can read the list at HealthCare.gov.
  1. You received a shut-off notice from a utility company
  2. You filed for bankruptcy in the last 6 months
  3. You experienced unexpected increases in necessary expenses due to caring for an ill, disabled, or aging family member
  4. You recently experienced the death of a close family member
  5. You had medical expenses you couldn't pay in the last 24 months that resulted in substantial debt
  6. Your individual insurance plan was cancelled and you believe other Marketplace plans are unaffordable
  7.  You experienced another hardship obtaining health insurance

In order to qualify for a hardship exemption, you must follow the instructions on this application form and submit it to the Marketplace (same as HealthCare.gov). The instructions note that after the application form is submitted, you should hear back within 1-2 weeks concerning whether or not you have been granted the exemption. 

If you get an exemption from the Marketplace, you must keep the letter that the Marketplace sends you with your exemption certificate number (ECN). You will need the ECN when filing your personal, federal taxes. 

October 28, 2014

MinistryCPA Special Topic: Exemption Overview for the Health Insurance Marketplace

The "shared responsibility payment" started in 2014, which means that every person needs to have health insurance or make a payment (a nice way of saying a fee) on his or her federal income tax return. However, HealthCare.gov lists some exemptions that may allow individuals to avoid making this payment. Below, we have broken down the various exemptions while describing the different ways to apply for them.

Several of the exemptions can be claimed in one of two ways: (1) either when you file your federal tax return for the year or (2) when you apply for the exemption early through an application form. The following exemptions can be claimed by either of the two options previously described:
  1. Exemptions based on coverage being unaffordable
  2. Exemptions for membership in a health care sharing ministry
  3. Exemptions for membership in a federally-recognized tribe
  4. Exemptions for being incarcerated
The following three exemptions can only be claimed in advance through an application form and not when you file your federal tax return:
  1. Exemptions based upon hardship
  2. Exemptions based on eligibility for services through an Indian health care provider
  3. Exemptions for membership in a recognized religious sect whose members object to insurance
The last three exemptions have special situations:
  1. Exemptions based on low income: If your income is low enough and you do not need to file a tax return, you do not need to apply for an exemption.  
  2. Exemptions based on coverage gap: If you have a gap in coverage of less than 3 months, you do not need to apply for an exemption.
  3. Exemptions based upon illegal presence in the U.S.: If you are not lawfully present in the U.S., you do not need to apply for an exemption.
If you do not qualify for these exemptions and if you do not have a qualified health insurance plan, here are the fees you will have to pay on your federal tax return. 


October 23, 2014

Age Limits for IRA Contributions

Question:

Up until what age can I contribute to my Traditional IRA or Roth IRA?

Answer:

As long as all other requirements are met, a person can contribute to his or her Traditional IRA until that person reaches the age of 70.5 years.

Roth IRAs are different in that contributions can be made regardless of age; there is no "age limit." 

Although a lengthy document, IRS Publication 590 is a great resource concerning Individual Retirement Arrangements (IRAs).

 

October 22, 2014

Milestone - 200,000 Page Views



Earlier today, we reached 200,000 total page views on this blog! 

In late 2007, Dr. Corey Pfaffe, CPA, began this blog with the purpose of answering financial and tax questions asked by ministers and others serving in Christian ministries. It took us until March 14, 2013 to get 100,000 total page views. Now, only nineteen months after that first milestone, we have reached 200,000 page views. 

Thank you to everyone who has used this blog and has helped us reach this milestone. We hope that MinistryCPA has been of service to you and that our posts continue to help guide you in ministerial and ministry tax issues. We look forward to serving you in the future and reaching our next milestone!

Corey Pfaffe - CPA, Principal
Tara Watterson - CPA, Senior Accountant
Laurie Pfaffe - Office Administrator
Kyle Kutz - Accounting Associate 

October 17, 2014

Cautions for a Church Serving as a Missions Agency

Question:

Our church is thinking about acting as a missions agency by directly supporting some missionaries. Do you see any concerns with doing this?

Answer:

In the past, we have provided blog posts concerning how churches have chosen to serve as missions agencies. Recently, however, we have deepened our research and discussion concerning this complex topic. Our research and experience has provided some additional cautions about a church taking on the responsibilities of a missions agency. 

Regulations for missionaries continue to become more complex. Unless a church is willing and able to thoroughly research and act in accordance with these regulations, we strongly discourage churches from acting as missions agencies. We fear that either the church or the missionary will not have the expertise to comply with the law. 

Recently, the following topics have added to that complexity:
  • Affordable Care Act
  • Foreign Bank Account Reports (FBARS)
  • Payments to foreign nationals
  • Retirement plans
  • Employee vs. contractor classifications
  • Payments to foreign charities
  • Foreign Account Tax Compliance Act (FATCA)
  • Expense reimbursement plans
Before making a decision to act as a missions agency, we strongly suggest that a church consider contacting us or its own professional advisor.