New Jersey Health Insurance Market Preservation Act

New Jersey Health Insurance Market Preservation Act

New Jersey recently enacted the New Jersey Health Insurance Market Preservation Act, effective January 1, 2019, which will require its residents to maintain health insurance throughout 2019 and beyond, or be subject to a penalty (annual shared responsibility payment) on their New Jersey Income Tax return (Form NJ-1040). Even though the Federal income tax penalty has been eliminated, New Jersey residents may still be subject to a shared responsibility payment imposed by the state.

Generally, failure to have health insurance coverage or qualify for an exemption will result in a shared responsibility payment when you file your 2019 New Jersey Income Tax return. If you are not required to file a 2019 New Jersey Income Tax return, you are exempt from this mandate. There are various exceptions where other exemptions are granted if you meet certain conditions, for example if your income is below a certain level or if you are experiencing a hardship.
The amount of the shared responsibility payment is based on your income and family size, but is capped based on certain criteria. Most basic health coverages satisfies this new requirement, but certain employer plans that provide only very limited benefits do not.
Our team of experienced professionals and advisors at Gramkow, Carnevale, Seifert, & Co., LLC can be a valuable asset by helping you understand how to comply with the newly enacted New Jersey Health Insurance Market Preservation Act.
For more details on what qualifies for the exemption from the shared responsibility payment, how to claim the exemption, how the penalty is calculated, and what type of health coverage plans qualify, please contact us on this or any other issue or question you have.

Did You Know?

You can pay your invoices by credit card online. This is one of many of our convenient services we provide for our clients.

Please visit our website at: https://www.gcs-cpa.com/ and click on “Make A Payment.”

Meet Our Team

Robert Griggs, CPA
Robert (Rob) Griggs, CPA is a Director at Gramkow, Carnevale, Seifert & Co., LLC. Rob provides accounting, tax planning and consulting and business advisory services with an emphasis in family-owned and closely-held businesses. Rob services clients in various industries including retail, manufacturing, restaurant and real estate. Rob also has many years of experience in the construction industry and is involved with servicing the firm’s construction clientele. Rob’s professional experience has been exclusively in public accounting with over 20 years of experience.
Rob is a Certified Public Accountant licensed in New Jersey and New York. Rob earned his Bachelor of Business Administration – Accounting degree at Pace University in 1984. Rob is an active member of CPA Associates International, Construction Financial Management Association, New York State Society of Certified Public Accountants and the American Institute of Certified Public Accountants. Rob has served on various CPAAI niche services committees and is a member of the firm’s Assurance Committee.

Should you have any questions or wish to speak to a team member, please don’t hesitate to call us at 201-599-0008.

New IRS Audit Rules – Partnerships

New IRS Audit Rules – Partnerships

New partnership IRS audit rules, effective for audits of partnership tax years beginning on or after January 1, 2018, are a substantial departure from the prior partnership audit rules. The changes are expected to dramatically increase the audit rates for partnerships and will require partners to carefully review, if not revise, their partnership’s operating agreement.

The new rules generally apply to partnership returns filed after 2018, but careful planning today will help mitigate any unfavorable consequence. The IRS may collect any additional tax, interest, and penalty directly from the partnership rather than from the partners (the tax could be collected at the highest individual tax rate).

Particularly, the new term “partnership representative” replaces the prior “tax matters partner.” The partnership representative is critical. They will act at the single point of contact between the IRS and the partnership, and will have full authority to bind the partnership and the partners during an audit. A partnership representative can be chosen by the partnership or assigned by the IRS. As a result, it is important to understand how and when a partnership representative is designated.

A partnership with 100 or fewer partners may elect out of the new partnership audit rules and be subject to the old audit rules. Many factors need to be considered to make this election, including an understanding of the old audit rules as compared to the new audit rules and the corresponding impact on incoming and outgoing partners for the audit years in question. Certain specified procedures are required to elect out of the new partnership. The opt-out election must be made in a certain manner and at a specific time frame to make the election valid.

Our tax professionals here at GCS have the knowledge and detailed understanding of both the new and old partnership audit rules. We can serve to guide you in making the right decision in how your partnership will be audited. Please don’t hesitate to contact us with questions or concerns or if you would like to meet with us to discuss this issue or any of your other financial or tax needs.

Meet Our Team
Yaroslav Tashak

Yaroslav Tashak is an Associate at Gramkow, Carnevale, Seifert, & Co., LLC (GCS.) He joined the GCS team in 2017 and previously has experience as an accounting assistant in the manufacturing industry. Yaroslav specializes in assurance/accounting services in the healthcare industry and tax services.

Yaroslav graduated from Montclair State University with Bachelors degree in Accounting and is currently pursuing a Masters degree in Accounting as well. He is a part of NJCPA, AICPA, and NACVA. Yaroslav was born in Ukraine. He volunteers with United Way as a part of their Volunteer Income Tax Assistant program (VITA). In his free time, he enjoys traveling, working out, spending time with friends and family, movies and listening to music.

Benefits of IRA Qualified Charitable Distributions

Benefits of IRA Qualified Charitable Distributions

With the passage of the Tax Cuts & Jobs Act (TCJA), many taxpayers will no longer itemize their deductions, and as such, will not be able to take advantage of tax savings through charitable contributions. The qualified charitable distribution (QCD) is an attractive tax planning tool for senior taxpayers looking to meet their individual retirement account (IRA) required minimum distributions while making a tax deductible charitable contribution.

QCDs can benefit those taking the standard deduction if they choose to make their charitable contributions directly through an IRA distribution. Thus QCDs may lead to significant tax savings.

Recognizing that taxpayers may want to explore the option of using QCDs, there are numerous requirements, such as limitations on the QCD amount that may be excluded from gross income in a tax year, the types of IRAs that distributions can be made from, the manner in which the distribution should be made, and the required timing of the distribution.

Other noteworthy considerations include carryover provisions for unused portion of the QCD allowed for a taxpayer for a tax year, whether contemplated Roth conversions still make sense to them in the long run, and the state income tax implications of a QCD.

This tax planning tool may have additional impacts on your tax filings, such as lessening the effect of phase outs and limitations on other benefits. Our experienced professionals and advisors at Gramkow Carnevale Seifert & Co., LLC can be a valuable asset to determine how QCDs may impact your individual tax planning.

Did You Know?

Most of our full-time tax and accounting staff are highly involved members in many accounting associations such as American Institute of Certified Public Accountants (AICPA) and New Jersey Society of Certified Public Accountants (NJSCPA.)

New Jersey Tax Amnesty Update

As a follow up to our August 2018 e-mail blast, we want to provide an important update on the status of the New Jersey Amnesty program.

The New Jersey Division of Taxation recently announced the period of the tax amnesty program will be 60 days, beginning on November 15, 2018 and ending on January 15, 2019. Accordingly, please be watchful for any notices you receive from The Division of Taxation and forward to us so we can review to determine liability exposure and what the best course of action is to respond.

Should you have any questions or wish to speak to a team member, please don’t hesitate to call us at 201-599-0008.

New Jersey Sales Tax Audits

New Jersey Sales Tax Audits

Due to the recent Supreme Court ruling the case of Wayfair vs South Dakota, we foresee a large rise in the number of sales tax audits.
In short, the Supreme Court ruling on the case Wayfair vs South Dakota overturned a case from 1992. This new ruling states that any sales created over the internet will be subject to sales tax in each state where the product is sold, even if you or your company does not have a physical presence in that state.

For example, if your company is physically placed in New Jersey, and you sell to a client who is in Pennsylvania, your company is now required to collect sales tax, for each product sold, for the state of Pennsylvania.

While this example pertains to New Jersey, this is applicable to all states that impose state & local sales tax. The exception states that do not impose a sales tax are Alaska, Delaware, Montana, New Hampshire and Oregon. If you sell to any state or locality imposing sales tax, you will be required to charge, collect, remit, report and file sales tax returns.

Receiving an audit notice can raise a lot of questions and uncertainty, but we here at GCS have the knowledge, resources, and experience, in various states, to help assist and guide all of our clients throughout the sales tax audit process to minimize sales tax liabilities and exposure.
Please don’t hesitate to contact us with questions or concerns or if you would like to meet with us to discuss this issue or any of your other financial or tax needs.

Did You Know?

Gramkow, Carnevale, Seifert, & Co., LLC provides tax and accounting services to clients from all over the country and the world.

Paid Sick Leave Comes to New Jersey

New Jersey Workers Will Be Entitled to Paid-Sick Leave:
What Employers and Employees Need to Know

The New Jersey Paid-Sick-Leave Act (“the Act”) recently went into effect on October 29, 2018. The Act will require New Jersey employers of all sizes and business entity types to provide their covered employees (part-time and full-time) up to 40 hours of paid sick leave per year. As a result, there are many changes employers need to be aware of, and these changes should be implemented right away.

The Act requires an employer to accrue sick time leave as it is earned or to front load the full 40 hours in the beginning of the year.

If an employer does not front load the 40 hours of sick leave in the beginning of the year, this sick leave will accrue at the rate of one hour for every 30 hours worked. Additionally, employees will have the ability
to carry over a maximum of 40 hours of sick time into the following year.

In order to properly administer paid-sick-leave, both employers and employees must understand
how sick leave can be used. It is important that an employer knows and exercises the various parameters and guidelines of the new law to ensure the proper procedures are followed. For example, the employer must provide all employees with a written copy of their rights.

Employers should understand what rules govern carryover and payout, in what increments can employees use sick leave, what happens to accrued sick leave upon transfer, separation or reinstatement of an employee, and what notice, documentation, and record keeping rules are required. Employers should also know about the impact of local paid-sick-leave laws and how the new law will be enforced. Employers can be held liable for improper use of sick leave if the guidelines are not properly adhered to.

These changes that face businesses and individuals can be a large impact on day to day operations. Our team of experienced professionals and advisors at Gramkow Carnevale Seifert & Co., LLC can be a valuable asset to guide both employers and employees through these changes in the state of New Jersey by helping you understand and implement the New Jersey Paid-Sick-Leave Act.

Did You Know?

Gramkow, Carnevale, Seifert, & Co., LLC (GCS) recently launched a brand new website. The website is a great resource for questions regarding services we provide, contact information, and other pertinent information.

You can visit our new and updated website at: https://www.gcs-cpa.com

 

Year End Planning – Last Chance to Unwind IRA-to-Roth IRA Conversions

Sometimes we take risks and make financial decisions anticipating stability or changes in economic factors impacting the outcome of our decisions. Taxpayers who made a regular-IRA-to-Roth-IRA conversion in 2017 may regret their decision due to factors such as market declines. Fortunately, such taxpayers may recharacterize (unwind) their conversions, but they must act no later than October 15, 2018. We have experienced professionals at Gramkow, Carnevale & Seifert & Co., LLC who understand the opportunities and challenges when converting or recharacterizing contributions to a Roth IRA.

Taxpayers who believe Roth IRAs are a better choice for them than regular IRAs may convert funds from regular IRAs to Roth IRAs within 60 days of the distribution. Additionally, a distribution from a qualified retirement plan can be contributed to a Roth IRA through a direct rollover or received by the distributee and contributed (rolled over) to a Roth IRA within 60 days.

Unlike the usual IRA rollover, however, a switch from regular IRA or qualified plan to Roth IRA is not income-tax-free. Rather, it is subject to tax as if it were distributed from the regular IRA or qualified plan and not recontributed to another IRA. It generally isn’t subject to the 10% premature distribution tax.

Many taxpayers who made a 2017 regular-IRA-to-Roth-IRA conversion may find the move was not to their advantage. An example may be because the Roth IRA account has declined in value because of a stock market slump or because the effective income tax rate on the conversion was higher in 2017 than it would otherwise be in 2018 (as a result of new tax law lower income tax rates).

Taxpayers in this situation, may unwind the 2017 transaction by recharacterizing the regular-IRA-to-Roth-IRA conversion no later than October 15, 2018. This involves transferring the converted amount (plus earnings, or minus losses) from the Roth IRA back to a regular IRA via a trustee-to-trustee transfer.

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In addition to a very small window to act upon, there are many complicated factors that need to be considered in making a 2017 recharacterization, including the timing, the age of the taxpayer, considerations of reconverting in 2018 and the time frame for reconverting in 2018, not to mention the reporting aspects of a recharacterization. We have experienced tax professionals and financial planners who understand the multiple aspects of the Roth recharacterization decision and the various planning opportunities that come with it. Please contact us to discuss this issue or any other issues as we look to offer solutions designed to help meet your financial needs.

Did You Know?

Gramkow, Carnevale, Seifert, & Co., LLC has received the Inside Public Accounting’s Best of the Best Firms recognition for seven years.

 

Planning for Chronically or Terminally Ill Clients

As we age, some of us may experience significant changes in health resulting in chronic or terminal illness. The life transition from relatively good health to poor health comes with sudden and increased medical costs. Understanding the nature of these medical costs and how they will be paid is a good start but only part of this life transition process. Establishing a “short term financial needs plan” for medical costs can help minimize anxiety about covering health care costs. We have several years of experience advising aging clients on how to properly plan and manage health care costs, bringing clients and their families great peace of mind.

We begin by advising and helping clients establish a care budget. This is a simple budget focusing on the short term (6 to 24 months) following initial diagnosis, identifying the estimated costs of care for serious illness. A care balance sheet is also prepared, identifying all assets and potential sources of tax-free cash that can be used to finance estimated health care costs. Identifying care-related medical expenses is the most important step in the process. We can help you identify and categorize all out of pocket health care costs.

The care budget not only to serves to identify surplus or deficits and sources of cash flow available for anticipated health care costs but also serves to track health care coverage and related changing costs as a result of transitioning from one type of coverage to another. It also records key election dates the client needs to meet.

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Being diagnosed with a chronic or terminal illness is a life changing event. We understand when this situation occurs the client and his or her family are often emotionally overwhelmed and as a result have difficulty focusing on the process of managing their health care costs. We have experienced professionals in establishing short term financial needs plans to help clients through this process that will alleviate the fear, uncertainty and anxiety clients and their families face when initially diagnosed with a chronic or terminal illness. Please contact us to discuss this, or any other issue that has occurred.

Did You Know?

You can securely upload and download confidential documents through our secure file transfer portal.  This portal can also be used to easily access your tax filings at any time.

If you would like a portal set up for your individual or business needs, please contact GCS at your earliest convenience.

New Jersey Tax Amnesty

Governor Phil Murphy has signed legislation that requires the Division of Taxation to conduct a tax amnesty during a period that will last no longer than 90 days and end no later than January 15, 2019. The start date of the tax amnesty program has not yet been determined.

A taxpayer who has failed to pay any state tax on or before the day on which the tax is required to be paid may pay to the Division on or before the last day of the period established by the Division, the amount of that tax and one-half of the balance of interest that is due as of November 1, 2018, but without the remaining one-half of the balance of interest that is due as of November 1, 2018 and without any late payment penalty, late filing penalty, cost of collection, delinquency penalty or recovery fee that may otherwise be due. The taxpayer will be required to pay any civil fraud or criminal penalty arising out of an obligation imposed under any state tax law.

The amnesty program applies only to state tax liabilities for tax returns due on or after February 1, 2009 and prior to September 1, 2017. The taxes that qualify under the amnesty program include unassessed amounts as well as amounts under audit or being contested with the Division of Taxation, and all state taxes administered by the Division of Taxation matter (not including unemployment type taxes administered by the Department of Labor).

The amnesty is not available to a taxpayer who has been notified by the Office of Criminal Investigation in the Division of Taxation that he or she is under criminal investigation for a state tax

In summary, all New Jersey businesses with non-compliance issues should consider this amnesty program, as there is a 5% penalty, which is not subject to waiver or abatement, in addition to all other penalties, interest, or costs of collection otherwise authorized by law, upon any state tax liabilities eligible to be satisfied during the period established that are not satisfied during the amnesty period.

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This is an excellent opportunity to clear any past due tax liabilities, with no penalty assessment and reduced interest costs. We have experienced professionals dealing with IRS and state amnesty programs who can assess liability exposure for non-compliance, identify options and determine the proper course of action. We understand the importance of ensuring tax returns submitted for amnesty are prepared completely, accurately and filed timely to ensure the full benefits of tax amnesty are realized. Please contact us to discuss this, or any other issue.

Taxpayers Should Stay Alert Because Scammers Don’t Take A Summer Vacation

While many people take summer vacations, data thieves do not. Phishing emails and telephone scams continue to pop up around the country. The IRS reminds everyone to be vigilant to avoid becoming a victim.

Here are some things for taxpayers to remember so they can keep their personal data safe:

  • The IRS does not leave pre-recorded, urgent messages asking for a call back. In one scam, the victim is told if they do not call back, a warrant will be issued for their arrest. Other variations may include the threat of other law-enforcement agency intervention, deportation or revocation of licenses. The IRS will never threaten to immediately bring in local police or other law-enforcement groups to have the taxpayer arrested for not paying.
  • Criminals can fake or “spoof” caller ID to appear to be anywhere in the country, including from an IRS office. This prevents taxpayers from being able to verify the true call number. If a taxpayer gets a call from the IRS, they should hang up and call the agency back at a publicly-available phone number.
  • If a taxpayer receives an unsolicited email that appears to be from the IRS, they should report it by sending it to [email protected] Some people might also receive an email from a program closely linked to the IRS, such as the Electronic Federal Tax Payment System. Recipients should also send these emails to [email protected]
  • The IRS does not initiate contact with taxpayers by email to request personal or financial information. The IRS initiates most contacts through regular mail delivered by the United States Postal Service.

There are special circumstances when the IRS will call or come to a home or business. This includes situations when a taxpayer has an overdue tax bill or when the IRS needs to secure a delinquent tax return or a delinquent employment tax payment.