HSA - Tax-Advantaged Savings

An HSA (Health Savings Account) is a tax-advantaged savings account that is owned by an employee or self-employed person. The contributions and earnings can escape taxes when distributed if they go toward qualified medical expenses. So, if you have an HSA account and know in advance how much you will have in medical expenses, you can save that taxes.


The accounts are easy to set up and fund. The maximum contribution allowed for a family in 2016 is $ 6,750. If you are over 55, you can put an additional $1,000 into your HSA account.
Check if your HSA comes with investment options. HSAs accounts with investment options are a better choice for you.


Max, it Out to the point you can draw this money toward medical expenses. As you know, medical expenses are subject to an income limitation. The HSA, however, allows you to move a deduction for medical expenses from Schedule A to a deduction on the front of a Form 1040, so an HSA deduction will reduce your taxable income while medical expenses paid may not.
 

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FATCA - Foreing Account Tax Compliance - Who must file?

The Foreign Account Tax Compliance Act (FACTA) is an important development in U.S. efforts to combat tax evasion by U.S. persons holding accounts and other financial assets offshore. The legislation created new self-reporting requirements and increased penalties for failure to comply fully with complex reporting rules. The regulation imposes on all foreign financial institutions a vast new legal mandate to determine who among their clients are "U.S. Persons" and report directly to the IRS information on those clients' accounts. Usually, a withholding agent is required to withhold 30% on a withholdable payment made to a Foreign Financial Institution (FFI) or to a Non Financial Foreign Entity (NFFE), unless the FFI or NFFE meets certain requirements.

In general, federal law requires U.S. citizens and resident aliens to report any worldwide income, including income from foreign trusts and foreign bank and securities accounts. 

Generally U.S citizens, resident aliens and certain nonresident aliens must report specified foreign financial assets on Form 8938 if the aggregate value of those assets exceeds $50,000 on the last day of the tax year or $75,000 at any time during the tax year (higher threshold amounts apply to married individuals filing jointly and individuals living abroad).

Specified individuals, which include U.S. citizens, resident aliens, and certain nonresident aliens that have an interest in specified foreign financial assets and meet the reporting threshold must file Form 8938.

Form 8938 is due with your annual income tax return and filed with the applicable IRS service center.

There is a penalty up to $10,000 for failure to disclose and an additional $10,000 for each 30 days of non-filing after IRS notice of a failure to disclose, for a potential maximum penalty of $60,000; criminal penalties may also apply.

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Accountable Plan - Tax savings

You can have significant tax saving for both the company and employees when you use an accountable plan in your business for certain expenditures.

How you deduct a business expense under a reimbursement or allowance arrangement depends on whether you have: 

• An accountable plan, or 
• A nonaccountable plan. 

If you make the payment under an accountable plan, deduct it in the category of the expense paid. For example, if you pay an employee for travel expenses incurred on your behalf, deduct this payment as a travel expense. If you make the payment under a nonaccountable plan, deduct it as wages and include it in the employee's Form W­2. 

An accountable plan requires your employees to meet all of the following requirements. Each employee must: 

1. Have paid or incurred deductible expenses while performing services as your employee, 
2. Adequately account to you for these expenses within a reasonable period of time, and
3. Return any excess reimbursement or allowance within a reasonable period of time. An arrangement under which you advance money to employees is treated as meeting (3) above only if the following requirements are also met. 

An accountable plan is a reimbursement arrangement adopted by the company that requires employees to substantiate their business-related expenses to the company within a reasonable time (no more than 60 days from the date of the expense) and to refund to the company any excess advances within a reasonable period (no more than 120 days from the date of incurring or paying the expense); no advances can be made more than 30 days prior to the time of the expense.

With an accountable plan, reimbursements are not reported as income so the employer avoids payroll taxes and W-2 reporting. The employer deducts the business expenses. The employee does not have any income to report and does not have any expenses to claim as miscellaneous itemized deductions. Not having additional income means that adjusted gross income is minimized; this in turn may increase eligibility for certain tax breaks and/or avoid triggering certain phase-outs or additional taxes.

There is no IRS form used to adopt an accountable plan. The law does not even require that an accountable plan be in writing. However, formalities count when it comes to accountable plans. It’s wise to put the terms of the plan in writing. Corporations should add the adoption of accountable plans in their minutes. It is most important to operate an accountable plan in accordance with its terms.

We can help you to set up your accountable plan

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