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Quarterly Newsletter

CapitalIdeas WINTER 2013

armest holiday wishes from all of us at Mitchell & Schwartz. May you

enjoy festive plans with family and friends after completing your year-end tax planning. 2014 brings us the brunt of the Affordable Care Act. It will completely transition in with the 2016 tax year as it is now written. Most Americans will be required to have health insurance either through their employer, a private provider or through a state or federally assisted program by March 31, 2014. If you don’t have insurance by that date, the government will impose a health care tax penalty on your 2014 tax return (the one you file in 2015). By 2016 the penalty will be $695 per adult or 2.5 percent of the total household’s taxable income, whichever is greater. Employers with more than 50 full-time equivalent employees will be facing a tax penalty if they fail to provide affordable essential health coverage to their

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ContentsFrom The PartnersPage 1

Important DatesPage 1

Hire the Right EmployeePage 2

Affordable Care Act Reporting

Page 3

Rules Eased on Healthcare Flexible Spending Accounts

Secure Document DeliveryPage 4Page 3

Timing of Social Security BenefitsPage 4

W employees. On the flip side of the penalty, employers with fewer than 50 full-time equivalent employees and non-profit organizations could be eligible for tax credits if they meet the minimum coverage requirements. If you have any questions or concerns regarding your 2013 tax situation, please get a hold of us before the end of the year so that we have an opportunity to help. We appreciate all of our clients and friends that are partners in our success. It is truly you who bring us to the level of achievement that we enjoy today. We hope that 2014 will be a great year for all of you. Please let us know if there is anything we can do to help you achieve your business and financial goals for the year. We wish you and yours the very best for a happy holiday and a wonderful 2014. As always, we thank you for your continued support and especially for your many referrals.

December 31Last day to make charitable contribu-tions or other payments of itemized deductions in order to claim them as 2013 personal income tax deductions. Deductible credit card purchases made on or before December 31 will be deductible in 2013 even though paid in 2014.

January 15, 2014Due date for individual fourth quarter 2013 installment of estimated tax - Form 1040-ES.

February 28

March 17Due date to file corporate and S Corporation income tax returns and pay any tax due for calendar year 2013 (Form 1120 or 1120S). Automatic 6-month extension for filing (not paying tax due) may be filed with Form 7004.

Due date to elect S Corporation status for calendar year 2014.

January 31Due date for employer’s fourth quarter and annual 2013 payroll tax returns.

Due date for distribution of certain 2013 withholding statements and information returns such as Form W-2, and Form 1099-MISC.

Due date to file government copies of 2013 annual payroll reporting with the Internal Revenue Service and Social Security Administration.

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THire the Right Employee

• Tell me what you've done, or continue to do, to educate yourself.• What new goals or objectives have you established recently?• What have you learned about yourself in the past couple of years?

When you're short-staffed and the work and stress begin to pile up, it's easy to panic about filling open positions immediately. Similarly, when a candidate seems too good to be true, it becomes tempting to ignore seemingly obvious red flags. Hard as it may seem at the time, sometimes not hiring someone is better than hiring the wrong person.

questions in advance that you can ask to get a sense of whether the candidate is a good fit for the position and for working with other employees in the office.

Below are some good questions to include in an interview. The quality of the answers will reveal important insights regarding teamwork and personal responsibility:

• If I were to contact your current boss or coworkers today, what would they tell me about you?• In what situations has your work been criticized?

he costs of hiring the wrong person are steep. In addition to days or even weeks dedicated to training that goes

nowhere, payroll costs can reach hundreds or even thousands of dollars. The Society for Human Resource Management estimates that it costs $3,500 to replace one $8-per-hour employee.

It is not always easy to tell who is going to be a bad employee just from brief interviews and reference checks. The worst of bad employ-ees can be hard to spot because they are generally good at hiding their issues. There are a few things you can do to reduce your risk of making a bad hire.

1. Involve other team members in your decision. When relying on a single viewpoint it is easy to make snap decisions or even overlook hints of a troubling sign, which may be obvious to someone else. It is impor-tant that personalities mesh well in an intimate work environment. A strict proba-tionary period for new hires adds another layer of protection.2. Always check references. Call former employers or clients. Interview references. This will cut down on the hiring mistakes.3. Google the candidate. Blogs, Twitter, LinkedIn, Facebook, and even industry articles can reveal interesting details about a person that you'd never be able to uncover in even the best interview. This kind of research can also help you uncover inaccuracies in the candidate's résumé.4. Trust yourself. If your gut instinct says “no” but you are in a hurry to hire, go with your gut. It may hurt a little in the short-term, but save you some major issues with poor personnel.5. Ask tough questions. Don't be afraid to dig deep during an interview to get to know your candidates. Follow up candidates' answers with, “Why?” or “What makes you say that?" This forces answers to emerge that are not rehearsed and enables you to see a different dimension of the person.

Preparation for the interview is key. Make sure to have a clear job description. Prepare

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WAffordable Care Act Reporting

taxpayer; the name and tax identification number of the health insurance company; the number of months the taxpayer was covered by this insurance plan; and whether or not the plan was purchased in one of the ACA’s “exchanges.”

This will involve millions of new tax documents landing in mailboxes across America every January, along with the usual raft of W-2s, 1099s, and 1098s. At tax time, the 140 million families who file a tax return will have to get acquainted with a brand new tax filing form.

The Internal Revenue Service will require your personal identifying health information because that is how they will enforce the ACA’s individual mandate. Every January, health insurance companies across America will send out tax documents to each insured individual with a copy to the Internal Revenue Service. This tax document must contain sufficient information for taxpayers to prove that they purchased qualifying health insurance under the ACA.

This new tax information document must, at a minimum, contain: the name and health insurance identification number of the

hen The Affordable Care Act’s (ACA) individual mandate takes effect in 2014, all Americans

who file income tax returns will complete an additional IRS tax form. The new form will require disclosure of a taxpayer’s personal identifying health information in order to determine compliance with the Affordable Care Act’s individual mandate.

As confirmed by the Internal Revenue Service to the tax-writing House Committee on Ways and Means, “taxpayers will file their tax returns reporting their health insurance coverage, and/or making a payment.”

T The new rules go into effect immediately. However, they are not mandatory for employ-ers. Companies can decide whether to make the change and when to make it. Currently about 14 million Americans use the spending

accounts. Employers can make the change this year. Many will not because open enroll-ment season has been underway for some time and a switch during the year would be an administrative burden.

he United States Treasury Depart-ment and Internal Revenue Service changed the use-it-or-lose-it rule for

flexible spending arrangements (FSAs). You can now carry over as much as $500 from one year to the next without penalty.

Many taxpayers have not contributed to the plans for fear of losing whatever they didn’t use. They must estimate before the year starts how much they might spend on health-care. Employers deduct money from their paychecks to put into the FSAs. Any amount left over at the end of the year would go back to the employers.With less risk of forfeitures now, it isexpected that more taxpayers will take advantage of the deductions for everyday medical expenses such as co-pays, over-the-counter drugs and other items not normally covered by health insurance.

Rules Eased on Healthcare Flexible Spending Accounts

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210 NE Delaware Avenue, Suite 210Ankeny, IA 50021

This ONE SOURCE quarterly newsletter offers factual and up-to-date information on subjects discussed, but should not be regarded as a complete analysis of these subjects.

SSecure Document Delivery

Should you choose to opt for this service, please ensure that you use one of the follow-ing supported browsers:

Internet Explorer 7 through 10Mozilla Firefox 3.5 through 10Safari 4 through 6Google Chrome 6 through 29

Although not an absolute requirement, an up-to-date Java plugin for your browser will allow you to upload files by simply drag-

tarting 2014, we will be providing our clients an option to downloadand upload tax returns and other

financial documents online from our website. All transmissions will utilize AES 256-bit encryption to ensure the privacy and the confidentiality of the documents being transferred. With this service, our clients can securely send and receive files up to 10GB in size from a simple web interface. Each client will have a designated private folder on our server that is accessible 24/7.

TTiming of Social Security Benefits

benefit is filed before reaching FRA, the PIA may be reduced up to 30% to make up the difference of receiving a monthly payment for a longer time than if the participant waited until FRA. If a benefit is filed for after FRA up to age 70, then the monthly payment could increase by as much as 32%, due to the application of delayed retirement credits (DRCs). DRCs increase the monthly benefit by 8% for every year of delay between FRA and age 70. DRCs stop after age 70. As a general rule, it is better to delay taking Social Security benefits for as long as possible to maximize lifetime benefits. There may be

here are several items to consider in order to plan to maximize your Social Security benefits. One of those is the

timing of starting the benefit. Fortunately, the Social Security system allows eligible participants some flexibility in determining when they should start receiving their benefits. A worker’s benefits may begin as early as age 62, and as late as age 70, or any time in between. The participant’s full benefit is determined as of his or her full retirement age (FRA). The full benefit amount is also known as the participant’s primary insurance amount or PIA. If a

reasons not to delay payments, however; such as due to a chronic illness where a shorter lifetime is expected or if no other financial resources are available and delaying payment is not affordable. For planning purposes, one should also consider filing status, benefit reductions (these affect only uncovered wages which are wages paid to a worker or spouse that are not covered by Social Security) and longevity protection along with timing in order to plan most effectively to maximize lifetime Social Security benefits.

and-dropping files in the browser. Please visit http://www/java.com/getjava to obtain the latest plugin.

Initial account information will be emailed to each of our clients that provided us with an e-mail address in January 2014. For moreinformation or questions, please contact our office.