Share a Coke with the IRS

by Kenneth Hoffman


Coca Cola has earned a lot of headlines for their "Share a Coke with . . . " marketing campaign, printing bottles and cans with 1,000 of the most popular names in the country, along with nicknames like "Mom," "Dad," Soulmate," and "BFF." You can even go online to customize your own bottle for just five bucks. (Just imagine the possibilities . . . "Share a Koke with a Kardashian" for reality-TV wannabes, or "Share a Diet Coke with Your Yoga Instructor" for fitness fanatics? The Center for Science in the Public Interest even created a "Share a Coke with Obesity" can.)

Last week, our friends at the IRS decided to open a little happiness of their own. And apparently, they want more than just a can or two of fizzy sugar water. On Friday, Coca Cola Enterprises filed a Form 8-K with the Securities and Exchange Commission revealing that, after a five-year audit, the IRS is dunning them for $3.3 billion in extra taxes. Plus interest! (Fun fact: the audit covered just three tax years from 2007-2009. That means the IRS spent more time auditing Coke's income than Coke spent earning it!)

The issue centers on "transfer pricing," which governs how businesses set prices between controlled or related entities. Let's say Coca Cola sells a bottle of their delicious Vanilla Coke in Bermuda. (That sounds especially delicious, right?) How much of their profit should be taxed in Bermuda, where the average effective tax rate for multinational corporations is just 12%? And how much of it should be taxed back here in the U.S., where the rate tops out at 35%? That may not sound like a huge difference on something you can buy for a pocket change at a highway rest stop. But Coca Cola sells a lot of beverages — $46 billion worth last year. And 57% of that revenue comes from international markets.

With all that money sloshing back and forth across international borders, you can see how shifting tax rates on a few cents of income per drink can really add up. Transfer pricing issues may sound boring (and they are), but they're a big deal. The very serious lawyers who specialize in these sorts of disputes work out of stuffy offices in high-rent big-city buildings, and they've never even heard of casual Fridays.

Naturally, the folks at Coke don't think it will be especially refreshing to send the IRS an extra $3.3 billion:

    "The Company has followed the same transfer pricing methodology for these licenses since the methodology was agreed with the IRS in a 1996 closing agreement that applied back to 1987. The closing agreement provides prospective penalty protection as long as the Company follows the prescribed methodology, and the Company has continued to abide by its terms for all subsequent years. The Company's compliance with the closing agreement was audited and confirmed by the IRS in five successive audit cycles covering the subsequent 11 years through 2006, with the last audit concluding as recently as 2009."

Coke says they plan to file a notice challenging the deficiency in Tax Court. They've reassured shareholders that they have "adequate tax reserves," which means they can pay up if they lose. And if all else fails, they've got that secret formula locked up in a vault in Atlanta. That's got to be good for something, right?

Here's the bottom line. Coke makes billions of dollars a year. But they understand it's what they keep that counts, and they're willing to fight to keep more. Shouldn't you be working for the same goal? So call us for a plan, and pay for your next Coke with the savings. It's the real thing!

Let's Talk! For a deeper conversation on our services, or to become a client, call Kenneth Hoffman at (954) 591-8290 Monday - Friday for a no cost consultation, or drop me a note.

Kenneth Hoffman of K.R. Hoffman & Co., LLC is a highly sought after tax and business counselor. As a trusted senior advisor and counselor working closely with Entrepreneurs, Professionals and Select Individuals, Mr. Hoffman provides counsel to his clients who are navigating through the complexity of today's business, tax, and accounting challenges.

Click here to schedule an appointment with Kenneth Hoffman.

If you found this article helpful, I invite you to leave a comment andplease share it on twitter, facebook or your favorite social media site andwith your friends, family and colleagues. Thank you.

I truly value your business and I appreciate your referrals. Refer your family, friends, acquaintances, and business colleagues to KR Hoffman & Co., LLC. 

Follow us on Twitter at @TaxReturnCoach, and let us know how we're doing.


10 Most Expensive Tax Mistakes That Cost You Thousand$

by Kenneth Hoffman


Are you happy with your contribution to the IRS?

Are you confident you're taking advantage of every available tax break?

Is your tax adviser giving you proactive advice to save on taxes?

When is the last time your accountant or CPA came to and said "I have an idea that could save you THOUSAND$?

If you're like most business owners and professionals, you're not satisfied with the taxes you pay. You're not taking advantage of every legal deduction, credit, loophole, and strategy. And you're frustrated because your accountant isn't giving you proactive strategies and concepts to save tax.

The good news is you don't have to feel that way. You just need a better plan.
Read this report to discover tax mistakes that cost business owners and professionals thousands, year after year after year. Then call me at 954-591-8290 to learn how to fix those mistakes.

1. Failing to PlanThe first mistake is failing to plan. Planning is the key to beating the IRS, legally.

I don't care how good your accountant is with a stack of receipts on April 15. If you didn't know you could set up a Section 105 plan and write off your kid's braces as a business expense, there's nothing you can do on April 15. You lose that deduction forever!

True tax planning gives you concepts and strategies needed to minimize your taxes; in plain English, not legalese; without intimidating spreadsheets or endless "projections" that change every time Congress decides to change the law. What should you do? When should you do it? How should you do it?

And tax planning gives you two more valuable benefits.

First, it's the key to your financial defense. As a business owner, you have two ways to put cash in your pocket. Financial offense is making more. Financial defense is spending less. Taxes are probably your biggest single expense. So it makes sense to focus your financial defense where you spend the most. Sure, you can save 15% on car insurance by switching to GEICO. But how much will that really save in the long run?

And second, tax planning guarantees results. You can spend all sorts of time, effort, and money promoting your business. But that can't guarantee results. Or you can set up a medical expense reimbursement plan, deduct your daughter's braces, and guarantee savings.

We like to start new client relationships with a comprehensive tax plan that lets us start saving you money right away, long before we prepare your first tax return.

2. Wrong Expectations - The second mistake, which keeps people from taking advantage of true tax planning, is holding the wrong expectations. Do you think tax planning means "raising red flags"? Taking advantage of "gray areas"? Being "aggressive" and hoping not to get audited? In fact, it means nothing of the sort.

True tax planning means proactively scouring your business and finances for tax-saving opportunities. Asking questions before you make financial decisions to avoid unpleasant surprises. And taking advantage of every legal deduction, credit, and loophole the law allows.

Our tax-planning strategies are all court-tested and IRS-approved. You'll find that with true tax planning on your side, you don't need to raise red flags, shade into gray areas, or be aggressive to keep more of what you earn.

3. Wrong Entity - The next mistake is choosing the wrong business entity. Most business owners and professionals start out as sole proprietor, then go on to establish a corporation or limited liability company. But which corporation? A "C" corporation for employee benefits or an "S" corporation for minimizing employment tax? Limited liability companies can be even more complicated. That's because you can choose whether to pay tax as a sole proprietor, a partnership, a C-corporation, or an S-corporation.

Choosing the wrong entity can waste thousands in tax, year after year, for as long as you operate your business. If you're operating as a sole proprietor when you could take advantage of an S-corporation, for example, you'll pay thousands more into a Social Security system that you probably aren't counting on to finance your retirement. If you're operating as an S-corporation, you might be losing thousands in employee benefits you could deduct if you were a C-corporation. You might even do best with more than one entity, like an S-corporation to minimize employment taxes and a C-corporation to maximize employee benefits.

Complicated? Unfortunately, yes. But that's where we come in. We'll evaluate your business to see which entity makes the most sense for you now. And we'll keep evaluating your business as we work together to make sure you have the best possible structure going forward.

4. Wrong Retirement Plan - Choosing the right retirement plan can be just as challenging as choosing the right business entity. How much do you want to contribute for yourself? How much can you afford to contribute for your employees?

If you're looking to save more than the $5,000 limit for IRAs, you have four main choices: Simplified Employee Pensions ("SEPs"), SIMPLE IRAs, 401ks, and defined benefit plans.

SEPs are easy to set up and administer. But will a SEP be enough for your needs?

SIMPLE IRAs are also easy to set up and administer. But will a SIMPLE let you contribute as much as you'd like? What about employee contributions?

401ks aren't just for "big business" anymore. Should you consider an "individual 401k" for yourself and your spouse? How much will a 401k cost if you have employees?

Defined benefit pension plans let you guarantee up to $185,000 in annual retirement income. But defined benefit plans have required annual contributions, and they're harder to manage. Will the benefits make sense for you?

We can guide you through the retirement plan jungle to choose the best plan for your unique needs.

5. Missing Family Employment - The minimum age for hiring a child is just seven years old. That lets you get started saving early, and even help give them good work habits. They can earn up to the standard deduction amount for a single taxpayer (roughly $6,000 per year) without paying any income tax at all. And earned income isn't subject to the dreaded "Kiddie Tax."

We can help you determine how to pay your child, how to document it, and even where to put the money once you've paid them.

6. Missing Health Care Strategies - Now let's talk about health-care costs. Surveys used to show that taxes used to be small business owners' biggest concern. Now it's rising health care costs.

If you pay for your own health insurance, you can deduct it as an "adjustment to income" on Page 1 of Form 1040. If you itemize deductions, you can deduct unreimbursed medical and dental expenses on Schedule A, if they total more than 7.5% of your adjusted gross income. But most of us don't spend that much on healthcare, so we don't get full deductions for what we spend.

What if there were a way to write off medical bills as business expenses? There is, and it's called a Section 105 plan, or Medical Expense Reimbursement Plan.

If you qualify, you can write off just about any legitimate medical expense. Health insurance, long-term care coverage, Medicare, and "Medigap" insurance. Co-pays, deductibles, and prescriptions. Dental, vision, and chiropractic care. Big-ticket expenses like braces for your kids' teeth, fertility treatments, and LASIK surgery. Even nonprescription medications and medical supplies, like aspirin and cold remedies.

The best part is, this is money you'd spend anyway, whether you get a deduction or not. You're just moving it from a nondeductible place on your return, to a deductible place. You'll save income tax on whatever you deduct. You may even save self-employment tax too.

If a Section 105 plan won't work, we can discuss Health Savings Accounts. These arrangements combine a high-deductible health plan with a tax-free savings account to cover unreimbursed costs. They give you much the same benefit as the 105 plan, without quite the flexibility.

7. Missing Home Office Expenses - Home office expenses are probably the most misunderstood deduction in the entire tax code. For years, taxpayers feared it raised an automatic audit flag. But Congress has relaxed the rules, so now home offices attract far less attention.

Your home office qualifies as your principal place of business if: 1) you use it "exclusively and regularly for administrative or management activities of your trade or business"; and 2) "you have no other fixed location where you conduct substantial administrative or management activities of your trade or business." This is true even if you have another office, so long as you don't use it more than occasionally for administrative or management activities.

Claiming a home office lets you deduct the "business use percentage" of your mortgage interest or rent, property taxes, utilities, repairs, insurance, garbage pickup, and security. You'll get to depreciate part of your purchase price. And claiming a home office even boosts your car and truck deductions. That's because it eliminates nondeductible commuting miles for that business.

We'll help you determine if you qualify for the home office deduction - and if so, how to make the most of it.

8. Missing Car and Truck Expenses - Car and truck expenses are easy to overlook. That's because most taxpayers simply take a standard mileage allowance. But that allowance is the same for all vehicles, no matter how big they are, how much they cost, or how much gas they guzzle. Do you think every car on the road costs the same amount per mile to drive?

It might surprise you to see how much it really costs to operate your car. And it's likely to be much more than the IRS standard allowance! If you're taking the standard deduction for a car that costs more to operate than that flat amount every time you drive for business.

You may be throwing away savings you could take with the "actual expense" method. We can walk you through both methods to see which saves you the most now, as well as help make the right decision when it comes to buying or leasing a new car for business.

9. Missing Meals and Entertainment Expenses - Let's finish up with some fun deductions for meals and entertainment. The basic rule is that you can deduct meals where you conduct a "bona fide" business discussion. This means clients or patients, prospective clients or patients, referral sources, and business or professional colleagues.

So let me ask you - when do you ever eat with someone who's not a client, prospect, referral source, or business colleague? If you're in a business like real estate, insurance, or investments, where you're constantly marketing yourself, the answer might be "never." Be sure you deduct every meal where you legitimately advance your business!

You don't even need receipts for expenses under $75. You just need to record the cost of the meal, the date of the meal, the place where it takes place, the business purpose of your discussion, and your business relationship with your guest.

Do you ever entertain at home? Ever discuss business when you do it? Are you deducting those meals, too? There's no requirement that you eat out. So don't forget to deduct home entertainment expenses too!

You can even deduct entertainment expenses - like tickets to the theatre, tickets to a ball game, or even a round of golf - if they take place directly before or a substantial, bona fide discussion directly related to the active conduct of your business. You can deduct the face value of tickets, greens fees, etc., as well as food and beverages, parking, taxes, and tips.

We'll help you make the most of your deductible meals and entertainment so you don't miss a deductible dollar!

10. The Biggest Mistake of All - Now that you see how business owners and professionals miss out on tax breaks, let's talk about the biggest mistake of all.

What mistake is that?

The biggest mistake of all is missing our tax planning service. Have you all heard the saying "if you fail to plan, you plan to fail"? It's a cliché because it's true. Fortunately, our planning service avoids the problem.

We offer true tax planning. We tell you what to do, when to do it, and how to do it.

Call me at today 954-591-8290 or by email info@krhoffman.com for your free Tax Appraisal. We'll find the mistakes and missed opportunities that can cost you thousands - then prepare a plan for rescuing those lost dollars.

We guarantee you'll leave with new information and savings, or we'll donate $50 in your name to your favorite charity.

You have nothing to lose but opportunity. So call me at 954-591-8290 and schedule your analysis today!

Kenneth Hoffman of K.R. Hoffman & Co., LLC is a highly sought after tax and business counselor. As a trusted senior advisor and counselor working closely with Entrepreneurs, Professionals and Select Individuals, Mr. Hoffman provides counsel to his clients who are navigating through the complexity of today's business, tax, and accounting challenges.


#Windfall

by Kenneth Hoffman in ,


Psychologists agree that the ability to concentrate is key to achieving our goals. But today's high-tech world is full of distractions, from thousands of cable TV channels to millions of internet sites, with smart phones constantly within reach. Some experts say our attention span is actually shrinking. So should it be any surprise that Americans have fallen in love with Twitter, the online social networking and "microblogging" site that lets users send and read "tweets" limited to no more than 140 characters?
 

Twitter attracted confusion (and no small amount of scorn) when it debuted in 2006 — co-founder Jack Dorsey admitted that the service is "a short burst of inconsequential information." But there are now more than 200 million "monthly active users" posting more than 500 million tweets per day. Singer Katy Perry currently has the most followers, at 46.8 million. She's trailed by Justin Bieber (46.7 million), Lady Gaga (40.4 million), and Barack Obama (39.5 million). Twitter's ubiquitous "hashtag," the pound sign (#) that denotes keywords, appears everywhere, including at the Oscars, the Super Bowl, and the floor of the U.S. Senate.

Twitter still doesn't make any money. But that didn't stop them from going public last week. On Thursday, Twitter issued 70 million shares at $26 each. The price nearly doubled in early trading before closing at $41.65 on Friday. And it made a lot of people rich. Co-founders Evan Williams and Jack Dorsey are billionaires. CEO Dick Costello, whose 2012 cash salary was just $200,000, is worth $300 million. All told, about 1,600 investors and employees became millionaires last week. (If you planned on buying a house or a Porsche in Silicon Valley, plan on standing in line and paying more!)

What does that all mean for our friends at the IRS? It means a #windfall, that's what!

  • Twitter has granted non-executive employees over 92 million "restricted stock units" which will essentially convert to stock over the next several years. Employees will owe regular income tax of up to 39.6% plus Medicare tax of up to 3.8% on the value of those shares. They'll owe an average of $420,000 each in federal tax!
  • Uncle Sam won't be the only taxman with his hand out. The state of California can conservatively expect to collect another $300 million or more. (California is no stranger to big IPOs — Golden State officials calculated they would collect $2.5 billion over four years from Facebook's debut.)
  • Not everyone is quite so happy. Two years ago, the city of San Francisco waived part of its payroll tax to keep Twitter headquartered downtown. City officials predicted the waiver would cost them $22 million over six years. Last week's windfall could mean leaving another $34 million on the table. Of course, the City by the Bay still collects millions more than if Twitter had bugged out for the suburbs.
  • Who's not paying a dime in tax? That would be Twitter itself. Of course, that's because they haven't made a dime in profit. In fact, Twitter has over $100 million in "net operating loss carryforwards" it can use to offset tax on future profits.

Twitter's investors and employees have some big tax planning challenges ahead. They're going to need more than just 140 characters to take advantage of all the legal strategies available to pay less. It works the same for you, even if you're not America's newest billionaire. If you want to #keepwhatyoumake, you need a plan. So call us now before December 31, when you can still do something about it!

Kenneth Hoffman of K.R. Hoffman & Co., LLC is a highly sought after tax and business counselor. Counseling Entrepreneurs, Professionals and Select Individuals who are struggling with ever changing tax laws and who are paying too much in taxes. All the while he is protecting his clients from the IRS and other taxing authorities using proactive tax planning strategies, ensuring compliance while reducing their annual IRS contribution, and bringing his clients Peace of Mind.

Discover how I can help you overcome your tax and business challenges. To start the conversation or to become a client, call Kenneth Hoffman at (954) 591-8290 Monday - Friday for a no cost consultation, or drop me a note.

Click here to schedule an appointment with Kenneth Hoffman.

If you found this article helpful, I invite you to leave a comment and  please share it on twitter, facebook or your favorite social media site and  with your friends, family and colleagues. Thank you.

I truly value your business and I appreciate your referrals. Refer your family, friends, acquaintances, and business colleagues to KR Hoffman & Co., LLC. 

Follow us on Twitter at @TaxReturnCoach, and let us know how we're doing.


Year End Business Tax Tune-Up

by Kenneth Hoffman in ,


As the year draws to a close, it’s important that we review your business’s income for 2013 to project the estimated tax liability for the year and see if there are steps we can take to minimize that liability.

There are a number of tax breaks that are set to expire this year unless Congress works together to extend these tax breaks, which seems unlikely at this time. However, the focus should not be entirely on tax savings, but rather on whether or not an action otherwise makes good financial sense for your business.

In addition, new rules have come out with respect to the acquisition and disposition of business property that are quite favorable to businesses, but may require some revisions to your fixed asset policies. Depending on your current policies, it may be possible to recoup refunds by filing amended returns for prior years.

Section 179 Expensing Deduction

One of the biggest deductions available to all businesses, and one that will be dramatically reduced in 2014, is the Section 179 expensing election. This is the last year for expensing up to $500,000 of Section 179 property. It is also the last year in which the maximum amount that may be expensed is reduced where the taxpayer places into service more than $2 million of Section 179 property.

For tax years beginning after 2013, the maximum amount that may be expensed drops to $25,000, and this amount is reduced where the taxpayer place into service more than $200,000 of Section 179 property. Thus, if you are anticipating any large purchases in the next several months, it may be advantageous to accelerate such purchases into the current year to take advantage of this deduction. (Note: despite the higher overall expensing limit in 2013, a $25,000 limitation applies to purchases of sport utility vehicles (SUVs) and certain other vehicles.)

Bonus Depreciation

Another deduction that generally expires at the end of 2013 is the bonus depreciation deduction. Under the bonus depreciation provisions, taxpayers can elect to claim a special additional depreciation allowance to recover part of the cost of certain qualified property placed in service during the tax year. The allowance applies only for the first year the property is placed in service and is an additional deduction taken after any Code Sec. 179 deduction and before calculating regular depreciation for the year. There is no cap on the total bonus depreciation that may be deducted during the year.

Although the bonus depreciation deduction is generally scheduled to disappear after 2013, it will continue through 2014 for certain long-lived property and transportation property.

Shorter Recovery Period for Certain Leasehold Improvements, Restaurant Buildings and Improvements, and Qualified Retail Improvements Ends

Special provisions in the law allow qualified leasehold improvement property, qualified restaurant property, and qualified retail improvement property to be depreciated over a 15-year recovery period rather than the normal 39-year recovery period used for nonresidential real property. Those provisions expire at the end of 2013. Thus, if your business is contemplating any such purchases or improvements, placing such buildings or improvements in service in 2013 would significantly increase your depreciation deductions.

Special S Corporation Basis Rules for Charitable Contributions of Property

For 2013, the decrease in an S shareholder’s stock basis by reason of a charitable contribution of property is equal to the shareholder's pro rata share of the adjusted basis of such property. This favorable rule expires for contributions made in tax years beginning after 2013. As a result, for contributions made in tax years beginning after 2013, the amount of the basis reduction is the shareholder's pro rata share of the fair market value of the contributed property.

Expiration of Reduced Recognition Period for S Corporation Built-in Gains

An S corporation may owe the tax if it has net recognized built-in gain during the applicable recognition period. Generally, the applicable recognition period is 10 years. However, for purposes of determining the net recognized built-in gain for tax years beginning in 2012 or 2013, the recognition period was reduced from 10 to five years. Thus, no tax is imposed on the net recognized built-in gain of an S corporation if the fifth tax year in the recognition period preceded 2012 or 2013. This favorable rule applies separately with respect to any C corporation asset transferred in a carryover basis transaction to the S corporation.

After 2013, the recognition period returns to 10 years. Thus, to escape gain recognition on property with built-in gain, you will have to hold the property for more than 10 years.

New Rules Apply to Property Purchased by Businesses

The IRS recently issued new rules that affect all businesses that acquire, produce, or improve tangible property. Thus, few businesses are unaffected by these rules. While these new rules apply to tax years beginning after 2013, businesses can adopt them for certain earlier years. Because these rules are quite taxpayer-friendly, retroactive adoption of these rules could result in significant refunds to your business. A new de minimis rule allows items to be expensed without question, up to a certain amount. However, taxpayers must have, at a minimum, a written capitalization policy that they follow for book purposes in order to take advantage of this rule. If this is something your business does not currently have, I can help you establish a policy. However, we need to get such a policy in place before the beginning of your next tax year. The new rules also contain several taxpayer-friendly elections that we need to discuss to see if they would be a good fit with your business.

New Rules Apply to Dispositions of Business Property

The IRS also recently issued rules dealing with dispositions of property, which apply to tax years beginning after 2013. Like the rules discussed above, these rules also affect almost all taxpayers and can be retroactively adopted. One benefit of these rules is that taxpayers can now claim a loss upon the disposition of a structural component (or a portion thereof) of a building or upon the disposition of a component (or a portion thereof) of any other asset without identifying the component as an asset before the disposition event. However, to the extent your business is currently using procedures that are inconsistent with these new rules, we will need to make some changes to your fixed asset policy, revise the procedures for property dispositions, and file for a change in accounting method.

Gain or Loss on Dispositions of Partnership and S Corporation Interests Are Subject to the Net Investment Income Tax

A new 3.8 percent tax on net investment income above a threshold amount took effect in 2013. The threshold amount is $200,000 ($250,000 if married filing jointly or $125,000 for married filing separately). Income taken into consideration in calculating net investment income includes most rental income and net gain attributable to the disposition of property other than property held in a trade or business. Thus, this generally covers sales of interests in a partnership or S corporation. If you had such dispositions this year, or expect to, we need to determine the impact it will have on your tax liability to ensure that your tax withholdings and estimated tax payments will cover the resulting additional tax liability.

Potential Increases in Tax Rate and Tax on Dividend Distributions to Business Owners

The tax rates in effect before 2013 for dividend distributions to business owners were generally made permanent by the American Taxpayer Relief Act of 2012, except that, beginning in 2013, a new 20-percent rate applies to amounts that would otherwise be taxed at a 39.6-percent rate (i.e., the highest individual tax rate). Thus, tax rates of 0, 15, and 20 percent apply to dividend income, depending on your tax bracket. Dividend distributions may also be subject to the 3.8 percent net investment income tax if certain thresholds are exceeded.

Work Opportunity Credit

For 2013, a business is eligible for a 40 percent credit for qualified first-year wages paid or incurred during the tax year to individuals who are members of a targeted group of employees. This credit is not available after 2013.

Generally, this credit is equal to 40 percent of the qualified first-year wages of members of a targeted group of employees who worked 400 or more hours during the year for the employer. The credit is reduced to 25 percent of the qualified first-year wages for employees who worked between 120 and 400 hours for the employer. No credit is available for the qualified first-year wages for employees who worked less than 120 hours.

Patient Protection and Affordable Care Act

The Patient Protection and Affordable Care Act (PPACA) includes several provisions that may affect you as an employer, including the so-called shared responsibility provisions, also known as the “employer mandate.” Originally, this employer mandate was suppose to take effect on January 1, 2014. However, this has been delayed and the shared responsibility provisions will not take effect until January 1, 2015. Under the employer mandate, a penalty is imposed on certain large employers that do not offer health insurance coverage, offer health insurance coverage that is unaffordable, or offer health insurance coverage that consists of a plan under which the plan's share of the total allowed cost of benefits is less than 60 percent. The penalty is assessed for any month in which a full-time employee is certified to the employer as having purchased health insurance through a state exchange with respect to which a premium tax credit or cost-sharing reduction is allowed or paid to the employee.

For these purposes, a large employer is an employer (including a predecessor employer) that employed an average of at least 50 full-time employees during the preceding calendar year. An employer is not treated as employing more than 50 full-time employees if the employer's workforce exceeds 50 full-time employees for 120 days or fewer during the calendar year and the employees that cause the employer's workforce to exceed 50 full-time employees are seasonal workers. A seasonal worker is a worker who performs labor or services on a seasonal basis, including retail workers employed exclusively during the holiday season and workers whose employment is, ordinarily, the kind exclusively performed at certain seasons or periods of the year and which, from its nature, may not be continuous or carried on throughout the year.

A qualified small employer may be eligible for a credit for contributions to purchase health insurance for its employees. The amount of the credit increases from 35 percent (25 percent for tax-exempt organizations) of eligible premium payments in 2013 to 50 percent (35 percent for tax-exempt organizations) in 2014. The tax credit is subject to a reduction if you have more than 10 full-time employees or if average annual full-time employee wages exceed $25,000.

Finally, employers must report the cost of employer-sponsored group health plan coverage on employee W-2s.

Schedule your appointment now so I can estimate your business’s tax liability for the year, review policies surrounding the acquisition and disposition of fixed assets, discuss options for reducing your business’s taxes for 2013, and to address any concerns you may have.

Kenneth Hoffman of K.R. Hoffman & Co., LLC is a highly sought after tax and business counselor. Counseling Entrepreneurs, Professionals and Select Individuals who are struggling with ever changing tax laws and who are paying too much in taxes. All the while he is protecting his clients from the IRS and other taxing authorities using proactive tax planning strategies, ensuring compliance with minimal tax liability while bringing his clients Peace or Mind.

Discover how I can help you overcome your tax and business challenges. To start the conversation or to become a client, call Kenneth Hoffman at (954) 591-8290 Monday - Friday between 8:30 a.m. to 1:00 p.m. for a no cost consultation, or drop me a note.

Click here to schedule an with Kenneth Hoffman.

If you found this article helpful, I invite you to leave a comment and  please share it on twitterfacebook or your favorite social media site and  with your friends, family and colleagues. Thank you.  

I truly value your business and I appreciate your referrals. Refer your family, friends, acquaintances, and business colleagues to KR Hoffman & Co., LLC. 

Follow us on Twitter at @TaxReturnCoach, and let us know how we're doing.