Janell A. Israel & Associates
1585 Kapiolani Blvd., Suite 1604, Honolulu, Hawaii 96814 Phone: 808-942-8817
March 2016 Tax Newsletter
What's New in Taxes:
Got Health Coverage? New Forms Help Avoid Penalties
If you had health coverage during 2015, you may receive one or more information returns that you haven't seen before. Form 1095-B, "Health Coverage," provides information about who your health policy was issued to, who was covered by the policy, and the months of coverage. Form 1095-C, "Employer-Provided Health Insurance Offer and Coverage," tells you what coverage your employer offered, who in your family was covered, and when the coverage was in place.
You may receive some or none of these forms, and you don't need to attach them to your federal income tax return. In fact, you can file your return before you receive Forms 1095-B or 1095-C. However, you will need to have an older form in hand to complete your return. Form 1095-A, "Health Insurance Marketplace Statement," has information about your insurance, who was covered by your policy, and when the coverage was in effect.
Not sure which forms apply to you? Contact us for help.
Can You Benefit From These Tax Breaks?
Here are tax breaks you may be able to use to reduce the amount you owe on your 2015 personal and business federal income tax returns.
* Child credit. You can claim this $1,000 tax credit for each qualifying dependent child who was under age 17 at December 31. The credit, which reduces your tax dollar-for-dollar, is partly refundable but phases out as your income rises.
* Education benefits. The above-the-line deduction for higher education tuition and related expenses can reduce the amount of your income subject to tax by up to $4,000. In addition, you can also claim the American Opportunity Tax Credit, a credit of up to $2,500. Both the deduction and the credit are subject to phase-outs as your income rises.
* State and local sales tax deduction. If you itemize, you can choose to deduct either the amounts you paid during the year for state and local income taxes, or your total state and local sales taxes.
* Depreciable property. Under code Section 179, you can expense most types of otherwise depreciable real and personal property used in your business. For 2015, the maximum amount you can expense is $500,000 of the cost of qualifying property you placed in service during the year. The $500,000 is reduced when the cost of the property exceeds $2,000,000.
* Bonus depreciation. In addition to Section 179, you can benefit from the 50% bonus depreciation deduction for tangible personal property that you purchased and placed in service during 2015.
* Work opportunity credit. Are you an employer? You may be able to claim a credit of up to 40% of first-year wages you pay to workers hired from targeted groups.
These are only a few of the benefits available for 2015. Give us a call for more tax-saving opportunities.
What's New in Finances:
Talking About Finances Can Improve Your Relationship
With the due date for federal income taxes fast approaching, you may be wondering how you'll pay what you owe, or what you'll do with your refund. Have you discussed your options with your partner? Or do the two of you avoid talking about financial matters? If your answer to the second question is yes, you're not alone. According to a survey from the American Institute of CPAs (AICPA), financial decisions are a source of tension for 88% of adults between the ages of 25 and 34 who are married or living with a partner. Yet making time for the "money talk" could improve your relationship. The AICPA recommends that couples establish a habit of discussing finances and setting financial goals. Contact us for suggestions about how to get started.
How Are Your Financial Choices Affected By Interest Rate Changes?
Interest rate changes - even those as small as the one-quarter percentage point increase in December 2015 - can cause a ripple effect throughout the economy. Here are ways financial choices you may make at home and in your business can be affected.
* Savings and debt. As a consumer, you stand to gain from rising interest rates because you'll likely earn a better return on your deposits. On the other hand, the cost of borrowing money may increase. As a result, mortgages, car loans, and credit cards will demand higher interest rates. That's not a big deal if you're already locked into low-interest fixed-rate loans. But if you have a variable rate loan or carry balances on your credit cards, you may find your monthly payments climbing upward.
* Investments. Stock market volatility might increase because rate increases are not completely predictable. Sectors that are less dependent on discretionary income may be less affected. After all, you need to buy gas, clothes, and groceries regardless of changes in interest rates. Staying the course with a well-diversified retirement portfolio is still a prudent strategy. However, you may want to review your investment allocations.
* Business plans. If your company's balance sheet is loaded with variable-rate debt, rising interest rates can affect your bottom line and your plans for growth. As the cost of borrowing increases, taking out loans for new equipment or financing expansion with credit may become less desirable.
Contact our office if you have questions about the impact of interest rate changes on your financial decisions. We're ready to help with planning suggestions and advice.
All information is believed to be from reliable sources, however we make no representation as to its completeness or accuracy. The information contained in this newsletter is provided by Mostad & Christensen, Inc. The information is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance. For more information on anything in this newsletter, or for assistance with any of your tax, business or financial strategy concerns, contact our office.
Diversification helps you spread risk throughout your portfolio, so investments that do poorly maybe balanced by others that do relatively better. Neither diversification nor rebalancing can ensure a profit or protect against a loss.
Securities and advisory services offered through National Planning Corporation (NPC), Member FINRA/SIPC, a Registered Investment Adviser. Mosted & Christensen, Janell Israel& Associates and NPC are separate and unrelated companies. NPC does not provide tax or legal advice.
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