October 2019 – MSATP

Accountable Plans

Posted on October 24, 2019March 12, 2024 by Navaal Mahdi

By Bob Jennings, CPA, EA, CFP® of TaxSpeaker

Many employees incur job related expenses such as mileage, travel, entertainment, dues, licenses, supplies, office equipment, etc. An employee whose employer requires the employee to provide for and pay for such expenses essentially makes the employee pay income and social security tax on the expenses.

Because employee miscellaneous itemized deductions are no longer deductible on a Federal return under the 2017 Tax Cuts and Jobs Act, these are the worst expenses an employee can incur, and the employee must push strongly for an accountable expense plan (or direct employer payment) of these expenses.

Many employers do not recognize the cost to the employee and also do not recognize the savings they could obtain by establishing an accountable expense plan. Accountable plans should be used by most employers for reimbursing auto expenses, travel, licenses, dues, and meals & entertainment. An accountable plan is an allowance or reimbursement policy (not necessarily a written plan) under which amounts are nontaxable to the recipient if the following requirements are met:

There must be a business connection to the expenditure.
There must be adequate accounting by the recipient within a reasonable period of time. (Usually 60 days) (advances must be made no more than 30 days before the expense)
Excess reimbursements or advances must be returned within a reasonable period of time. (120 days) IRC §62(c); Reg. §1.62-2.

Without an accountable plan in place all employee expenses fall under the miscellaneous expense non-deductible rule, and any cash payments by the employer to the employee are taxed as wage income. With an accountable plan, any amounts reimbursed to the employee are not reportable to the employee nor deductible by the employee. The TaxSpeaker USB Drive includes an example accountable plan.

Innovative New Program to Help Tax Clients Access Health Insurance

Posted on October 24, 2019March 12, 2024 by Navaal Mahdi

By Stephanie Klapper, Deputy Director, Maryland Citizens’ Health Initiative

Tax preparers play a big role in people’s lives. Soon, thanks to the Maryland Easy Enrollment Health Insurance Program, preparers will have an opportunity to help clients in another important way—by helping them gain access to quality, affordable health care. Starting this January, Marylanders will be able to indicate on their tax returns whether they would like Maryland Health Benefit Exchange to determine if they are eligible for free or low-cost health coverage. Maryland Health Benefit Exchange manages the State of Maryland’s health insurance marketplace, Maryland Health Connection.

Using tax returns to start the application process for health insurance makes a lot of sense because about 130,000 Marylanders who file tax returns are eligible for free or low-cost health insurance through Maryland Health Connection. Many of these Marylanders don’t even realize that they are eligible for financial assistance for health insurance! Tax preparers can reach many of these Marylanders through their tax returns. Not only does this help the taxpayer, it helps reduce health care costs for all. People without health insurance often receive medical care in the most expensive way possible—through a trip to the emergency room that results in uncompensated care. These high costs drive up everyone’s insurance premiums. When more people are insured, uncompensated care drops.

This upcoming tax return season is the pilot for the Maryland Easy Enrollment Health Insurance Program. Here’s how it will work: Tax Forms 502 and 502B will include questions for Marylanders to indicate whether they, their spouse, and/or their dependents have health coverage and their dates of birth. Marylanders who are uninsured then can select to authorize the Comptroller of Maryland to share information from their tax return with Maryland Health Benefit Exchange to determine pre-eligibility for no-cost or low-cost health care coverage.

Once the tax return is submitted, the Comptroller’s Office will send the relevant information to Maryland Health Benefit Exchange. Next, the Exchange will send a letter to the tax filer letting them know if they are preliminarily eligible for free or low-cost health coverage and ask them to take further steps to confirm eligibility and enroll in health coverage. To complete their enrollment, they can visit the MarylandHealthConnection.gov, call 855-642-8572, or receive free in-person assistance from trained experts throughout the state.

With your help, thousands of Marylanders will receive quality, affordable health coverage this tax season. And this is just the beginning. In the future, we anticipate building ways that Marylanders will be able to use their tax returns to enroll in health coverage even more seamlessly. I am proud to serve with Sandy Steinwedel on the Maryland Easy Enrollment Health Insurance Program Advisory Board, which will provide input on how to make this landmark program work in the best way possible for years to come.

If you have questions about the new program, stop by our table at the upcoming Maryland Income Tax Update seminars offered by MSATP. For dates, times and locations, visit our seminars page.

Interview Day At McDaniel College

Posted on October 16, 2019March 13, 2024 by Navaal Mahdi

McDaniel College’s annual Interviewing Day, which took place on October 2, 2019, provided students with the opportunity to “speed interview” with businesses in the Baltimore area, including accounting firms, banks, insurance agencies, and investment companies. At the event, students were able to interview for internships or jobs, or to gain experience in the interviewing process itself. More than 175 interviews were conducted in a three-hour time period.

More than 50 sophomores, juniors, and seniors at McDaniel College majoring in accounting economics, business administration, and economics participated. This annual event allows McDaniel’s economics and business administration students to find jobs or internships with the possibility of full-time employment following graduation.

MSATP would like to recognize Christian Hauffman who is sophomore at McDaniel College. Christian received one of the Maryland Society of Accountants annual accounting scholarships in September. We wish all of the accounting students at McDaniel great success!