Monthly Archives: April 2015

State tax collections continue to increase

Westchester NY accountant Paul Herman of Herman & Company CPA’s is here for all your financial needs. Please contact us if you have questions, and to receive your free personal finance consultation!

By Bankrate.com

Most of us finished our annual federal tax filing by April 15.

Most of us also wrapped up our state filing duties then, too, since most of the states that collect income tax from their residents follow the Internal Revenue Service schedule.

State taxes tend to get overlooked in the yearly focus on tax tasks. But just like Uncle Sam, every state has to come up with operational funds.

And they’ve been doing a darn good job at that.

State government tax revenue has increased for four straight years, according to U.S. Census Bureau. In fact, says Uncle Sam’s data collection agency, 33 states reported an increase over their previous year’s total tax collections.

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Growing state tax revenue

The latest look at state government tax collections from the Census Bureau shows that in fiscal year 2014, states brought in almost $866 billion.

The $865.8 billion in state taxes last fiscal year was a 2.2 increase over fiscal 2013′s $847.1 billion.

Individual income tax accounted for $310.8 billion of the states’ tax collections in fiscal 2014. That’s a slight increase of 0.4 percent or $1.1 billion from the $309.7 billion states collected in fiscal 2013.

And while not as much in raw dollars, state sales and gross receipts taxes saw the largest percentage growth. State treasuries took in $271.3 billion in these taxes last fiscal year, an almost 5 percent increase over the prior year’s $258.9 billion collected in these areas.

Best at collecting taxes

My native state of Texas landed in the top three in both percentage increases in total tax revenues and dollar amount increases from fiscal year 2013 to 2014. And we don’t even have a state income tax!

States with the highest percentage increases in fiscal 2014 total tax revenues over 2013 were:

  • North Dakota, with an increase of 15.5 percent from $5.3 billion to $6.1 billion;
  • New Mexico, with an increase of 6.9 percent, from $5.4 billion to $5.8 billion; and
  • Texas, with an increase of 6.7 percent, from $51.8 billion to $55.3 billion.

In the dollar amount breakout, the states with the largest increases in total tax revenues from fiscal year 2013 to 2014 were:

  • California, with an increase of $4.9 billion (3.7 percent increase), from $133.2 billion to $138.1 billion;
  • Texas, with an increase of $3.5 billion (6.7 percent increase), from $51.8 billion to $55.3 billion; and
  • New York, with an increase of $3.3 billion (4.5 percent increase), from $73.7 billion to $77 billion.

Worst at collecting taxes

At the other end of the revenue scale, Alaska has the dubious distinction of topping both the list of states that recorded the largest percentage drop in tax collections and the list of states with the most dollar drops in tax revenue from fiscal 2013 to 2014.

The three states with most state tax revenue decreases, percentage-wise, were:

  • Alaska, which saw its tax revenue drop 33.9 percent, from $5.1 billion to $3.4 billion;
  • Delaware, with a decrease of 5.1 percent, from $3.3 billion to $3.2 billion; and
  • Kansas, with a decrease of 3.8 percent, from $7.6 billion to $7.3 billion.

Looking strictly at state treasury dollars, the three states that lost the most money were:

  • Alaska (again), with a drop of $1.7 billion, or the 33.9 percent noted above;
  • Ohio, with a decrease of $496.3 million, a 1.8 percent decrease, from $27.5 billion to $27 billion; and
  • Arizona, which lost $387.6 million, a 2.9 percent decrease, from $13.5 billion to $13.1 billion.

We’ll have to wait for the next Census Bureau look at state tax collections to see how much the money you paid this filing season will affect your state’s balance sheet. The fiscal 2015 numbers should be particularly interesting, thanks to some sweeping changes in many state tax laws, including cuts in income tax rates.

Did you see a marked change in your state tax bill this filing season? Did you end up paying more or less than last year?

Herman and Company CPA’s proudly serves Bedford Hills NY, Chappaqua NY, Harrison NY, Scarsdale NY, White Plains NY, Mt. Kisco NY, Pound Ridge NY, Greenwich CT and beyond.

 

Where are your tax dollars spent?

Westchester NY accountant Paul Herman of Herman & Company CPA’s is here for all your financial needs. Please contact us if you have questions, and to receive your free personal finance consultation!

By Bankrate.com

Tax Day is done, for most of us anyway. Uncle Sam thanks you. He now has a fresh influx of cash to keep his businesses running.

But just what is he doing with our tax payments? The White House has an answer.

The Obama administration has an online calculator on WhiteHouse.gov, where you can enter in your income tax amount and see which federal operations get your money, and how much.

I plugged in $25,000 to get an idea of how taxes are distributed.

where-are-your-tax-dollars-spent-tax-blog

Almost $6,873 of that payment is going toward health care. That’s 27.49 percent of the tax payment.

This isn’t the Affordable Care Act, otherwise known as Obamacare. According to the White House, the health care budget segment of the calculator covers spending on Medicare Supplementary Medical Insurance and the prescription drug benefit, as well as Medicaid, the Children’s Health Insurance Program, food safety, disease control and other health care activities.

Our payroll taxes for Medicare also are excluded from this spending segment. Your annual Medicare and Social Security taxes are added separately to the calculator’s receipt of your tax dollars.

And military and veterans health care programs are accounted for under national defense and veterans benefits, respectively.

Defense dollars

Speaking of national defense, it’s the second most expensive line item in the taxpayer calculator.

Almost 24 percent of our tax dollars go toward spending on military personnel, operations, procurement and other national defense activities. For the $25,000 tax bill in our example, that’s around $5,978.

The only other sector that takes up a double-digit percentage of our taxes is job and family security. A little more than 18 percent of our taxes falls into this category, which includes unemployment insurance, food assistance and certain tax credits, such as the Earned Income Tax Credit, and other programs designed for income security. Of the $25,000 in taxes, $4,542.50 goes to this category.

Interest, etc.

What about the federal debt’s interest? That was a huge political rallying cry a few election cycles ago.

The White House calculator says 9.07 percent of our dollars go toward the accruing interest on the national debt. For this example’s purposes, that comes to almost $2,268.

The remaining areas where our taxes are spent, and the tax dollar percentages that go toward them, are: veterans benefits at 5.93 percent; education and job training at 3.59 percent; immigration, law enforcement and administration of justice at 2 percent; international affairs at 1.85 percent; natural resources, energy and environment at 1.64 percent; science, space and technology programs at 1.13 percent; agriculture at 0.97 percent; community, area and regional development at 0.43 percent; federal response to natural disasters at 0.39 percent; and the always fun catchall of additional government programs at 3.42 percent.

Uncle Sam’s balance sheet

Are you surprised by just where your tax dollars are being spent? More importantly, are you happy or upset about the distribution of the dollars?

Personally, I’d like to take some of the national defense dollars and send them to scientific endeavors, especially space programs. I mean, really, how stupid is it that we have to hitch rocket rides to the International Space Station from Russia?

If you’re not pleased with your taxpayer receipt, take it up with your members of Congress.

To see where your dollars could go in 2015, see Bankrate’s interactive story “What if you spent like the government?” It’s based on the White House’s 2015 budget proposal.

And if you got an extension to file your 2014 taxes, be sure to check the taxpayer receipt calculator when you’re done and see where your tax dollars will go.

Herman and Company CPA’s proudly serves Bedford Hills NY, Chappaqua NY, Harrison NY, Scarsdale NY, White Plains NY, Mt. Kisco NY, Pound Ridge NY, Greenwich CT and beyond.

Are you exempt from ACA coverage?

Westchester NY accountant Paul Herman of Herman & Company CPA’s is here for all your financial needs. Please contact us if you have questions, and to receive your free personal finance consultation!

By Bankrate.com

Millions of taxpayers have yet to file their 2014 federal tax returns. For a lot of folks, the issue is simple procrastination (guilty!).
taxes-blog-are-you-exempt-from-aca-coverage

Others, however, have put off filing because of the complexities of the Affordable Care Act, or ACA, popularly known as Obamacare.

One ACA component that could cause both filing and financial problems is the shared responsibility payment. This is the penalty individuals could face if they did not have ACA-acceptable insurance coverage for all of last year.

ACA exemption options

But you don’t have to worry about the tax penalty if you’re exempt from the ACA rules.

So just who gets an Obamacare coverage pass? The Internal Revenue Service says some common exemption situations are:

  • Unaffordable coverage. The lowest amount of coverage you could find is considered unaffordable, which generally means the policy costs more than eight percent of your annual household income.
  • Short coverage gap. You went without coverage for less than three consecutive months last year.
  • General hardship. You were unable to obtain coverage because of homelessness, eviction, foreclosure, domestic violence, death of a close family member or unpaid medical bills.
  • Income below the return filing threshold. You didn’t make enough to require that you file a tax return.
  • Indian tribe. You are a member of a federally recognized Indian tribe, including an Alaska Native Claims Settlement Act Corporation Shareholder. This exemption also applies if you were eligible for services through an Indian health care provider or the Indian Health Service.
  • Religious sects. You are a member of a religious sect in existence since December 31, 1950, that is recognized by the Social Security Administration as conscientiously opposed to accepting any insurance benefits, including Medicare and Social Security. The most commonly recognized group that qualifies for this exemption is the Amish.

No state Medicaid expansion

You also might qualify for an ACA exemption if you qualify for Medicaid coverage, but you live in a state that does not participate in Medicaid expansion under the ACA.

The states that the IRS currently lists as refusing to expand Medicaid include Alabama, Alaska, Florida, Georgia, Idaho, Indiana, Kansas, Louisiana, Maine, Michigan, Missouri, Mississippi, Montana, North Carolina, Nebraska, New Hampshire, Oklahoma, Pennsylvania, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, Wyoming and Wisconsin.

Check IRS site, forms

If you don’t have minimally acceptable ACA coverage and believe you might qualify for an exemption, check out the full list on IRS.gov.

Your tax preparer or tax preparation software also should be able to walk you through the exemption list.

You also can find additional information in the instructions to Form 8965. This is the form you must file to claim an exemption. If is one of four pieces of new tax paperwork created in connection with Obamacare.

Have you filed your taxes yet? Is the health care mandate at least part of the reason you’re putting off the task? If you have filed, did you run into any ACA problems?

Herman and Company CPA’s proudly serves Bedford Hills NY, Chappaqua NY, Harrison NY, Scarsdale NY, White Plains NY, Mt. Kisco NY, Pound Ridge NY, Greenwich CT and beyond.

Any U.S. tax advice contained in the body of this website is not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.