peggysioux5

Taxpayer had health insurance through employer; however, she called the Marketplace in January of 2015 to determine if she would be eligible for the PTC for 2015. She told the representative what her income was (she is at the 150% FPL) and what she was currently paying for coverage through her employer and what the employer plan covered. The representative set her up to receive the PTC so she dropped the employer coverage. She brings in her tax documents for 2015 and during our interview I ask her what the cost of the premium had been through her employer and that cost was below the 9% of income so I ask her if the employer coverage did not cover the minimum value requirements. She doesn't have a clue but told me she told the person through the Marketplace everything that the employer insurance covered. She then asked me why the representative would set her up to receive the PTC if she did not qualify so she says she must have qualified. So, I was hoping for input from other tax preparers. As tax preparers, are we to assume the Marketplace representatives did their due diligence before offering the PTC to taxpayers? Or are the tax preparers the only group that has to police the taxpayers and tell them they have to pay back the PTC for which they thought they qualified?

Rich, thank you for your input. The shareholder does have a basis issue and did take distributions beyond the AAA and will have to claim capital gains on distributions in excess of basis at the shareholder level, but the credit card was in the name of the corporation and 95% of expenses were business related so should be deductible, correct?

Unfortunately the shareholder take distributions from S-Corp when he needs additional personal funds and this is why I am hesitant in taking the late fee deductions. If there were not excessive distributions then I would think whole heartily that the fees were "necessary". But again, I don't know if I am being overly cautious and omitting a deduction that should be valid. I was hoping there was a clear cut regulation that would show if deductible or not and that other tax preparers could shed some light. I appreciate everyone's input. Peggy Sioux

There appears to be a grey area regarding the handling of late payment fees (or a difference of opinion by other tax preparers). While I would normally consider the fees tax deductible, the enormity of the fees for this business causes me to hesitate. Taxpayer stopped paying on credit card for a period of time, thus the large fees The credit card company does not show the late fees as interest when they provide the year-to-date interest paid. Another tax preparer noted Bailey TC Memo 1991-385 and after reading the ruling, I was leaning toward non-deductible, but do not want to omit a deduction at the taxpayer's expense if actually valid .

S-Corp taxpayer has SUBSTANTIAL late payment fees on a business credit card totaling more that $24,000. Would the late payment fees be considered interest and thus tax-deductible? S-Corp had a loss for the year in question and also had substantial shareholder distributions. The S-Corp has always made a profit in previous years.

But how are we, as tax preparers, determine if the employer's insurance meets the required minimum value requirements? I know that large employers are obligated to inform their employees of this information. But I do not think that small employers have the same requirement. The affordability requirement is much easier for us to determine if they are eligible. Taxpayer had insurance through her employer in 2014 so no problem for 2014. My concern is when 2015 return needs to be filed.

This is my first time posting to this board and appreciate any feedback other tax preparers can provide. The ACA questionnaires that I have reviewed ask if taxpayers were eligible for health care coverage through employers. If they answer "yes", there is another series of questions to ask to determine if they are eligible for the premium tax credit. My question is if the taxpayer comes to the appointment with a 1095-A but they answer yes to the above question, is it required of us to determine if they were indeed eligible for the premium tax credit that they received for 2014 or are we to assume that being they received a 1095-A, that the "Marketplace" made the determination that they are eligible and our job is to just reconcile the income actually received versus the estimated income to determine if any of the PTC received needs to be paid back. I have a client that had employer provided insurance for 2014 but she went on to tell me that for 2015 she received insurance through the "Marketplace" and is eligible for the PTC. Based on her income and premiums through her employer, her insurance is considered affordable. She also advised me that she had spoken with several different representatives in the "Marketplace" that told her they were not able to help her being she had insurance through her employer. So.....she tried a few more times and reached the one representative that set her up with insurance. I don't know if he was more knowledgeable or less than the other representatives. I just want to confirm that I know what my requirements are in this instance. Any input would be greatly appreciated.