Federal Law Changes that Will Affect Your Tax Return – Part 1

Was Obamacare really declared unconstitutional by the Supreme Court? Were the required minimum distributions (RMDs) at age 70 ½ from your retirement plan really eliminated? And how about the threshold for writing off medical expenses–was that also tossed away?

These are some of the questions people are asking in light of recent federal legislation. I’m going to answer these questions and clear up the misunderstandings most people have about the subjects in a 3-part series of blog posts.

Today, let’s talk about the Affordable Care Act (ACA)–what many people call “Obamacare.” The ACA contains a provision referred to as the individual mandate; this provision requires most Americans to purchase and keep in place a particular form of health insurance to avoid paying a tax (the individual shared responsibility payment) when they file their federal income tax returns.

In 2017, the Tax Cuts and Jobs Act (TCJA) reduced that tax to $0. Immediately after the TCJA went into effect, opponents of the ACA filed litigation, claiming the individual mandate was no longer constitutional. Their basis was the Supreme Court’s original ruling that the individual was constitutional because it contained a tax that met four requirements. Well, after the court case wended its way through the judicial system, the U.S. Fifth Circuit Court of Appeals agreed with those filing suit.

Specifically, the court ruled that the individual mandate was unconstitutional because it no longer contained a tax provision. Why? Because the individual shared responsibility payment no longer produced income to the federal government, was no longer paid by taxpayers, could no longer be determined by a taxpayer’s tax return, and was no longer enforced or collected by the IRS.

As of this writing, you will not be charged a tax if you didn’t have health insurance last year. And it’s looking like that is how it will be moving forward–at least with respect to the tax.

With respect to the rest of the ACA’s provisions, that’s anyone’s guess. Part of the case heard by the court of appeals related to whether the individual mandate could be severed from the ACA. Some want to strike the entire ACA unconstitutional because that was the fate of the individual mandate. However, the federal court has sent that portion of the case back to the district court for review. The Supreme Court just recently rejected a recent request for the process to be accelerated, so many believe the issue won’t be resolved until the fall of this year.

Check back tomorrow for the second part of this series: required minimum distributions (RMDs) and the age 70 1/2 threshold.


Good Advice for Setting up Your New Computer

I bought my first computer in1986 and, since then, I’ve learned a lot. Mostly what NOT to do, but still…

I recently had a desktop built to do exactly what I want it to do. When I received it, I had to set it up so it would replicate my current system–and not only use the same software, but also be able to play music through my stereo speakers when I present a live webinar, automatically backup certain files to the cloud, and sync my Outlook calendar and tasks with my iCloud account–to name just a few things.

At the end of this piece, I’ll share some of the online resources I used. Basically, here are the steps I compiled from my online resources and then confirmed with my son-in-law (who is the head of the IT department for a public utility in a nearby state). My resources all agreed about the steps, and the order in which they should be carried out. I followed their advice precisely. After the fact, the only thing I did out of order was install my password manager earlier in the process–it made my life a whole lot easier when I had to download software and/or login to it.

Disclaimer: This process does not include the stuff you absolutely MUST do before you get to this point:

  • Backup the data and important files from your old computer to an external hard drive
  • Make sure your network adapter/modem is attached to your computer before powering it up
  • All the other things they say in the resource articles I referred to (and that are listed below)

Here are the steps for setting up your computer out of the box (or after you begin working with one that’s been reformatted and hasn’t been personalized). Note: My desktop has a Windows 10 operating system.

  1. Once you connect the monitor(s)/keyboard/mouse and fire that baby up, go right to Windows Update in your PC Settings and do all the updates that are required. The advice I was given said this could take some time, and boy, was that advice right. My PC was built on January 3rd, I received it on January 9, and I set it up on January 10. The process took nearly 30 minutes. If you buy a PC that was manufactured 7 months ago instead of 7 days ago, it’s going to take a while.
  2. Install your favorite browsers. I prefer Firefox because it is supposed to be the most secure, but I have to use Chrome and Internet Explorer for certain apps and websites. In addition, with Windows 10, Microsoft Edge is recommended. So, yeah, install as many browsers as you think you might need. (Remember: if you can’t get something done on a website, switching the browser might accomplish what you need to do.) DON’T login to or use them yet, just install them.
  3. Check your computer’s Device Manager in PC Settings for any flags/warnings about your drivers. For example, my new PC did not have a driver installed for my VGA monitors–it was built with a Display port. (Translation: my monitors are old, my new PC is not.) Therefore, when I fired up my PC, neither of my monitors worked. I had to purchase a DVI to HDMI cable to connect one monitor to the PC (it translated my monitor’s analog signal to a digital one–the only type my new PC understands). Once that worked, I was able to connect the other monitor with the VGA to USB connector and the driver for that downloaded automatically. (FYI, I didn’t know this when I started. After 30 minutes of chatting with computer support–which was frustrating, I called my son-in-law–which I should have done first thing. His solution worked; theirs didn’t.)
  4. If you use one, install your Password Manager. (I inserted this step here, to make it easier to do all the following steps.)
  5. INSTALL YOUR SECURITY SOFTWARE. I can’t stress how important this is. I spend $69.99 per year for unlimited devices and download software to all my devices and those of people in my family. Yes, that subscription price protects multiple PCs, laptops, iPads, and smartphones–9 of them. Some software limits the number of devices, other software is more costly. Here’s a link to an article that compares multiple types of software. PICK ONE OF THEM, whichever works best for you. Now! (Yes, the software I use is on the list.)
  6. If you use cloud storage, install/download the software and set it up. I have four different cloud storage accounts and use them for different kinds of files: iCloud, OneDrive personal, OneDrive for business, and Dropbox. Each of the software vendors provides good online tutorials about how to set them up and use them. If you’ve never done this before, be sure to read several tutorials first (you’ll save yourself a lot of frustration, take it from me).
  7. Install/download your software and apps, and adjust your computer’s personalization settings. Of course, you’re going to forget some of these and, once you’re up and running, will have to stop in the middle of a project to attend to it. These are the things I forgot to add to my list (the one I prepared before I started setup):
    • Enable the speakers on my PC so I could play music through my computer’s speakers when I teach live webinars
    • The iCloud AddIn for Outlook (duh)
    • My time tracking software (double duh)

Here are those online resources I promised for verifying the steps I listed above:

Let me know if there’s something I forgot or should have included. Happy computing!


Want to Join a Lunch and Learn?

Check out a recent blog post written by my associate, Pam Reihs of A.D. Banker & Company. She describes the monthly Lunch and Learn webcasts she and I co-host about the most current topics affecting the insurance industry.

These webcasts are free, and they always fill up, so visit Pam’s blog post ASAP, where you can register to reserve your seat.


Update: Health Insurance and the Individual Mandate

When the Affordable Care Act (i.e., the ACA or ObamaCare) was originally enacted in 2010, a number of lawsuits were filed contesting its constitutionality. Many people were opposed to the federal government stipulating that most Americans had to be covered by a specific form of health insurance or be fined. (The ACA also required large employers to offer a specific form of health insurance to a certain percentage of full-time employees or be fined.)

The Individual Mandate is the ACA provision requiring individuals to be covered by health insurance that meets specific requirements of federal law to avoid paying a penalty. Technically, the monetary penalty was ruled a tax imposed by Congress and, therefore, the Individual Mandate was deemed constitutional by the Supreme Court.

In 2017, the Tax Cuts and Jobs Act reduced the Individual Mandate’s tax penalty to $0. This meant that beginning January 1, 2019, Americans were no longer taxed if they were not covered by federally mandated health insurance. As one would expect, that law also spurred litigation.

Last month, a federal Appeals Court ruled that because the Individual Mandate’s tax penalty was reduced to $0, it could no longer be considered a tax based on the criteria established by the Supreme Court in earlier legislation. Since the Individual Mandate no longer contains a tax, it is no longer constitutional.

While this decision might seem to indicate that everyone’s health insurance options will change this year, that is not the case. Why? Because another portion of the lawsuit heard by the Appeals Court was deferred until the lower court can study all the provisions in the ACA to determine which of them Congress intended to be severable from the rest of the ACA. In other words, just because the Individual Mandate is unconstitutional doesn’t mean all provisions of the ACA are, as well.

A complete review of the entire ACA will take months and months of time. Then, when the lower court submits its study to the Appeals Court, the ensuing judicial process can also be expected to take months. For the time being, our health insurance options should remain pretty stable, with the additional options offered by other recent federal legislation: the availability of Short-term Limited Duration Insurance (STLDI) and high-benefit, low-deductible health insurance plans (i.e., Cadillac plans). Note: the 40% tax on Cadillac plans was permanently repealed effective January 1, 2020 under the Further Consolidated Appropriations Act of 2020 (H.R. 1865).

Stay tuned for more info as it becomes available…


Do YOU Have a REAL ID?

Beginning in October of 2020, you won’t be be able to fly unless you have a REAL ID. After the terror attacks on the U.S. in 9/2001, Congress enacted a law that requires specific types of identification for people to access federal facilities, fly on commercial aircraft that is federally regulated, and to enter nuclear power plants.

In most states, when you present specific types of documentation at the time you obtain or renew your driver’s license, it will be marked with a star as REAL ID-compliant.

For specific information, visit TSA online for all the details: https://www.tsa.gov/real-id