Anthony Sykes & Company

        When looking into options to provide health coverage for employees, Health Reimbursement Arrangements ( HRA ) are often chosen by different businesses. This is a popular option for firms to give to their retired employees, as it gives a predictability ( maximum number ) for their yearly health costs. However, there are limitations on what they can cover. Some are put in place by the company, others by the Internal Revenue Service ( IRS ). HRA ’s are an attractive option because funding them is tax deductible for the company, but they are not the only option available.           A Flexible Spending Account ( FSA ) can be created. The employee will decide how much goes into this account, using some of their pre-tax salary to fund it. Typically, if there is any unused money at the end of the year, it cannot be rolled over to the next. A Health Savings Account ( HSA ) is paired with a high-deductible health plan ...

         A Health Reimbursement Arrangement ( HRA ) is a plan set up by a business to cover the qualified medical expenses such as prescription medications, physical exams, care from a psychologist or psychiatrist, and more. They are a tax deduction for the employer and tax free for the employee. In our last post, we mentioned that January 2020 would mark a big change in how HRA ’s could be administered.           Next year, a new type of HRA can be offered and used to buy health insurance inside or outside the Affordable Care Act marketplace. Another option that is available applies to companies that continue to offer group health insurance. They can offer an excepted benefit HRA , which would reimburse employees up to $1,800 for qualified medical expenses. If an employee were to decline group coverage and only go with the HRA , they could only use it for expenses, short term insurance and premiums. ...

          A Health Reimbursement Arrangement ( HRA ) is a plan set up by an employer. It covers medical expenses related to the care of employees and their dependents. This type of fund can be claimed as a deduction by the business and is usually tax free for the employee. This is often an attractive option for businesses because they determine how much will be in the fund. Any expenses over that amount will be covered by the employee.           This is not an account that can have withdrawals as necessary. The expense must be made, then it will be reimbursed. Since the HRA belongs to the company, if the employee leaves, they will lose the benefit. Starting in January 2020, HRA ’s will undergo a massive change. Our next post will detail why that is.

         The limit that was put on the amount of State and Local Taxes ( SALT ) that could be deducted from Federal Taxes as a part of the Tax Cuts and Jobs Act ( TCJA ), was quite a controversial topic. Some felt that they were being targeted and this led to various schemes and lawsuits being filed. Those feelings have not changed, and as a result of different tax changes being considered, the SALT deductions are being reconsidered in Congress.           While the SALT deductions will expire in 2025, it is unlikely that a repeal will happen before then. However, there are different alternatives that might come into play. For example, a limit on all deductions, which would include mortgage interest and charitable contributions. There are certain tax deductions which have not been limited. To find out more about them and if they apply to your situation, talk to your Qualified Tax Professional .

          At the end of August, the Internal Revenue Service ( IRS ) released some new guidance on changes related to Qualified Business Income ( QBI ) as covered in Section 199A . When the Tax Cuts and Jobs Act ( TCJA ) took effect, QBI was a topic of interest for many businesses. If the amount was determined correctly, it would directly lead to tax savings for the business. The calculations for this deduction have now changed.           All items related to a trade or business must be considered, including charitable contributions and unreimbursed partnership expenses. The new guidance indicates that QBI will be reduced by the amount of charitable donations made by the business. As a result of this and other changes, the Qualified Tax Professional handling the taxes for the affected businesses will need to make several manual adjustments to the Tax Return. Tax software has not been able to keep up with thes...

        For Taxpayers who use part of their home as an office for their business, certain expenses may be deductible. This is available to those who own as well as rent their home. The deductions can include mortgage interest, insurance, utilities, maintenance, and rent. There are, however, specific requirements that must be met.           A home can be any structure used on a property, as long as it is not a hotel or motel. There must be a dedicated part of this home where business is conducted. That home must be the place where most business is handled. This can include administrative or management functions of the business. In this way, if business is done outside the home, the Home Office Deduction can still be claimed. There are different methods that can be used to calculate the Home Office Expense Deduction. Speak with your Qualified Tax Professional to determine how this deduction applies to you and your bu...

        For employers who offer paid family and medical leave for their employees, they may qualify for a tax credit. There are several eligibility requirements that must be met in order to claim this credit. There must be at least 2 weeks of paid leave offered to full-time employees and a certain amount of time made available to part-time employees as well. This tax credit has a limited window of availability. It is only applicable for wage paid between December 31, 2017 to January 1, 2020 . The actual amount of the credit will be determined by how much employers paid their employees for reasons related to family or medical leave. The reasons for using this type of leave from work could be something like to having or caring for a child, caring for a family member with a serious health condition, or an emergency due to a family member being called to active duty. With time running out, get in contact with your Qualified Tax Professional to find out if you ca...