"Self-Employed Problem in 2014..."Over-estimating Income to Qualify?"

[Todd Preston]

Hi all,

I see a problem brewing in Fla (and perhaps many other states too).

I'm in Florida and I have "self-employed" clients who have shown losses in 2013 and estimated their income for 2014 to be aprx 1k per mth. I come to learn "Now"...that this income "estimate" is supposed to be "profit" (in other words, you need to show a profit of 12k on your tax returns for 2014).

Wow....COULD be problematic to say the least.

The net income to qualify for OBAMA CARE (from what i have heard in my state) is 12k for a single person. IF its under 12 (or there bout), the client would have to go with a Medicaid solution (which doesn't happen in Florida).

Now the problem i can fore-see is this. The Same clients will show losses in 2014 on their tax returns, but claim about 1k per mth in 2014 with the Health Ins. Mrkt Place ? ? ?

Apparently, the only solution would be to someone how come up with Income to reflect at 12k Net income for 2014 (which would be taxable income).

Anyone else fore-see this problem with their clients?

 

[KennyWest]

Are they talking BUSINESS income or personal? in other words it depends on how they report.. Are they LLC, S or C corp? even within those matters.... They could for example take income weekly, daily, monthly, etc. as "Partner Equity", etc.

 

[Todd Preston]

No....they do the schedules and the income is transferred to the net income on the 1040. Many of them have LLC's or S-corps.

So...the net income is a loss for 2013. However, 2014 would also be a loss. Which would be lower than 100 poverty level and bump them out of ACA.

So..that is the problem with self-employed ppl.
On one hand, you are taking advantage of every tax advantage...but in the end your income is below poverty level (in many cases with the self-employed)

Anyone else foresee this problem....?

 

[Cenla Agent]

No....they do the schedules and the income is transferred to the net income on the 1040. Many of them have LLC's or S-corps.

So...the net income is a loss for 2013. However, 2014 would also be a loss. Which would be lower than 100 poverty level and bump them out of ACA.

So..that is the problem with self-employed ppl.
On one hand, you are taking advantage of every tax advantage...but in the end your income is below poverty level (in many cases with the self-employed)

Anyone else foresee this problem....?

Yes.

Just another way to hammer the small business owner?

 

[Yagents]

Why not just claim less expenses? In the end the tax bracket on 12k is minimal and less than premium would be. Also, they will not have filed 14' income taxes yet when they forecast 15' income. S corps pay a salary to owner.

I guess there are only self employed people in florida per your comments.

Sounds like u don't understand the law well enough.

You should have hired me like we talked about a year ago

 

[timsip]

That is what I tell my clients that are self employed. One in particular has reported $6k last year and I told him to make sure to stop writing expenses off to show $16500 so he would qualify for premium subsidies and cost sharing reduction plans. He has a heart condition that has landed him in the hospital every year for a while now and his out of pocket for premium is about $40 with a deductible of $100 and a MOOP of $100.

 

[Todd Preston]

Why not just claim less expenses? In the end the tax bracket on 12k is minimal and less than premium would be. Also, they will not have filed 14' income taxes yet when they forecast 15' income. S corps pay a salary to owner.

I guess there are only self employed people in florida per your comments.

Sounds like u don't understand the law well enough.

You should have hired me like we talked about a year ago

Actually, i did mention other states.

But single member S Corp, can be done on a Schedule. Many ppl (especially those in the RE biz) are able to show losses consistently (legally).

On the flip side, I can see one solution as declaring more income, and less expenses to qualify....but, i see a problem brewing (not just in Fla.)

 

[taterpeeler]

hey todd... why didn't you hire YAgents to train you? you never answered his question... can you answer it?

 

[Yagents]

I guess it's cheaper to just experiment on prospects and learn on the fly

 

[Todd Preston]

hey todd... why didn't you hire YAgents to train you? you never answered his question... can you answer it?

At the time i spoke with Y, i was studying for the license and working another job. After i got the license, i hit the road prospecting and kept working my other job...and to be honest with you loss track of his tutoring offer.

This was about 12mths ago. I GUESS he wrote it down in his black book. It sounds like, he's taking it personally but that certainly wasn't my objective to offend anyone. To be honest, I never crossed it off my list of options, but got so busy between my 2 jobs that I forgot about his coaching offer.

I apologize to Yagents if i have offended him.