Jul 06

Oklahoma’s financial cost in losing Kevin Durant

I know that we as the Thunder nation are hurting over the loss of Kevin Durant as a player on the OKC team. But the impact of his leaving will affect more than just NBA fans.

As Oklahoma is an income tax state, the loss of Kevin Durant will result in an additional loss in revenue to our state coffers. A quick look at the estimates of the taxes he pays shows that this will not be an insignificant amount, either.

First, we would assume that he basically had to pay the maximum Oklahoma tax rate of 5.0% on all of his earnings.

His salary for actually playing basketball: $20,160,000. Loss in Oklahoma taxes of $1,008,000.

His endorsements this past year were estimated at $36,000,000. Loss in OK taxes of $1,800,000.

Estimated loss in revenue other businesses (ex. KD Restaurant) ~ $12,000,000. Loss in OK taxes of $600,000.

Just these added together will be a loss of about $3,400,000. Even this would go a long way towards teacher salaries (average in OK ~ $44,300), or towards roads, bridges, jails and other public services.

Additionally, we could assume that there will be a loss in city sales tax revenues in OKC with loss of sales of the merchandise with “35″. There may also be a loss of revenue in other OKC restaurants and hotels if the attendance at games decreases. Further, there could be a loss on taxes that the owners pay if profits for the team decrease. All of this just goes to show that professional sports are a big business and even if you don’t watch those sports and have no interest in them, it may still affect the services you receive from the state when the sport or one of the big players chooses to leave.

May 17

Cost of Nursing Homes Increased in 2015

This is a report I received from Travis Smith, lead counsel to Oklahoma Department of Human Services, the administer of Medicaid in Oklahoma:

Nursing Home Care Costs Are Only Slightly Higher in 2016

The median cost of a private nursing home room in the United States has increased slightly to $92,378 a year, up 1.24 percent from 2015, according to Genworth’s 2016 Cost of Care survey, which the insurer conducts annually. Genworth reports that the median cost of a semi-private room in a nursing home is $82,125, up 2.27 percent from 2015. The rise in prices is modest compared to the 4.2 percent and 3.8 percent gains, respectively, in 2015.

The price rise was even lower for assisted living facilities, where the median rate ticked up only .78 percent, to $3,628 a month.  The national median rate for the services of a home health aide was $20 an hour, the same rate as 2015, and the cost of adult day care, which provides support services in a protective setting during part of the day, actually fell from $69 to $68 a day.

Alaska continues to be the costliest state for nursing home care, with the median annual cost of a private nursing home room totaling $297,840. Oklahoma again was found to be the most affordable state, with a median annual cost of a private room of $60,225, which did not increase in 2016.

While prices may not have increased drastically from last year, the survey found that Americans underestimate the cost of in-home long-term care by almost 50 percent. Thirty percent believe it will be less than $417 a month. In fact, an in-home aide working 44 hours a month would cost $3,861, according to Genworth. For more information, click here.

 

The 2016 survey was based on responses from more than 15,000 nursing homes, assisted living facilities, adult day health facilities and home care providers. The survey was conducted by phone during January and February of 2016.

Feb 08

Nine Key Tax Tips for Farmers and Ranchers

The below 9 Key Tax Tips from the IRS email to tax professionals. Just a reminder that farmers, ranchers and fishermen have to have their taxes in by March 1, rather than the April 15 deadline for most filers.

1.  Crop insurance.  Insurance payments from crop damage count as income. Generally, you should report these payments in the year you get them.

2. Sale of items purchased for resale.  If you sold livestock or items that you bought for resale, you must report the sale. Your profit or loss is the difference between your selling price and your basis in the item. Basis is usually the cost of the item. Your cost may also include other expenses such as sales tax and freight.

3. Weather-related sales.  Bad weather such as a drought or flood may force you to sell more livestock than you normally would in a year. If so, you may defer tax on the gain from the sale of the extra animals.

4. Farm expenses.  Farmers can deduct ordinary and necessary expenses they paid for their business. An ordinary expense is a common and accepted cost for that type of business. A necessary expense means a cost that is proper for that business.

5. Employee wages.  You can deduct wages you paid to your farm’s full- and part-time workers. You must withhold Social Security, Medicare and income taxes from their wages.

6. Loan repayment. You can only deduct the interest you paid on a loan if the loan is used for your farming business. You can’t deduct interest you paid on a personal loan.

7. Net operating losses.  If your expenses are more than income for the year, you may have a net operating loss. You can carry that loss over to other years and deduct it. You may get a refund of part or all of the income tax you paid in prior years. You may also be able to lower your tax in future years.

8. Farm income averaging.  You may be able to average some or all of the current year’s farm income by spreading it out over the past three years. This may cut your taxes if your farm income is high in the current year and low in the prior three years.

9. Tax credit or refund.  You may be able to claim a tax credit or refund of excise taxes you paid on fuel used on your farm for farming purposes.

And one more I would add.

10. Farmers Tax Guidance.  You should work with a tax counselor throughout the year so you are able to gauge what may be owed and how to anticipate purchases and income as it relates to your taxable income.

Jan 23

Do I Need to File a Tax Return?

You may not be required to file. Here are some considerations from the IRS about whether you want to go through the expense of filing or not.

  1. General Filing Rules. Whether you need to file a tax return depends on a few factors. In most cases, the amount of your income, your filing status and your age determine if you must file a tax return. For example, if you’re single and under age 65 you must file if your income was at least $10,300. Other rules may apply if you’re self-employed or if you’re a dependent of another person. There are also other cases when you must file. Go to IRS.gov/filing to find out if you need to file.
  2. Premium Tax Credit.  If you enrolled in health insurance through the Health Insurance Marketplace in 2015, you may be eligible for the premium tax credit. You will need to file a return to claim the credit. If you chose to have advance payments of the premium tax credit sent directly to your insurer during 2015 you must file a federal tax return. You will reconcile any advance payments with the allowable premium tax credit. You should receive Form 1095-A, Health Insurance Marketplace Statement, by early February. The form will have information that will help you file your tax return
  3. Tax Withheld or Paid. Did your employer withhold federal income tax from your pay? Did you make estimated tax payments? Did you overpay last year and have it applied to this year’s tax? If you answered “yes” to any of these questions, you could be due a refund. But you have to file a tax return to get it.
  4. Earned Income Tax Credit. Did you work and earn less than $53,267 last year? You could receive EITC as a tax refund, if you qualify, with or without a qualifying child. You may be eligible for up to $6,242. Use the 2015 EITC Assistant tool on IRS.gov to find out if you qualify. If you do, file a tax return to claim it.
  5. Additional Child Tax Credit. Do you have at least one child that qualifies for the Child Tax Credit? If you don’t get the full credit amount, you may qualify for the Additional Child Tax Credit.
  6. American Opportunity Tax Credit. The AOTC is available for four years of post secondary education and can be up to $2,500 per eligible student. You, your spouse or your dependent must have been a student enrolled at least half time for at least one academic period. Even if you don’t owe any taxes, you still may qualify. You must complete Form 8863, Education Credits, and file it with your return to claim the credit. Use the Interactive Tax Assistant tool on IRS.gov to see if you can claim the credit. Learn more by visiting the IRS’ Education Credits Web page.
  7. Tolling of the Statute of Limitations. If a return is never filed, then the IRS period for being able to audit your finances never starts to run. If you file a return (and do not have any significant misstatements of income or expenses), then the IRS generally only has three years to determine that you are in substantial compliance. If you don’t file, that time frame extends forever. Sometimes it is just better to get the filing out of the way to have closure and be able to stop retaining records.
Jan 22

Prepping for Filing Tax Returns

From the IRS tax preparer emails, a few updates on what you need to bring related to your health insurance coverage for your tax preparation. A reminder, if you did not have qualifying coverage for the entire year, then you may owe a penalty of $695 or 2% of your Adjusted Gross Income as penalty.

The Affordable Care Act requires you and your dependents to have health care coverage, an exemption from the coverage requirement, or make a shared responsibility payment for any month without coverage or an exemption with your return. This law will affect your federal income tax return when you file this year

Here are five things you should know about exemptions from the health care law’s coverage requirement and the individual shared responsibility payment that will help you get ready to file your tax return.

  • You may be eligible to claim an exemption from the requirement to have coverage and are not required to make a payment. If you qualify for an exemption, you will need to file Form 8965, Health Coverage Exemptions,with your tax return.  You can claim most exemptions when you file your tax return. However, you must apply for certain exemptions in advance through the Health Care Insurance Marketplace,
  • If you receive an exemption through the Marketplace, you’ll receive an Exemption Certificate Number to include when you file your taxes. If you have applied for an exemption through the Marketplace and are still waiting for a response, you can put “pending” on your tax return where you would normally put your ECN.
  • You do not need to file a return solely to report your coverage or to claim a coverage exemption.

If you are not required to file a federal income tax return for a year because your gross income is below your return filing threshold, you are automatically exempt from the shared responsibility provision for that year and do not need to take any further action to secure an exemption.

  • If you file a tax return and your income is below the filing threshold for your filing status, you should use Part II of Form 8965, Coverage Exemptions for Your Household Claimed on Your Return, to claim a coverage exemption. You should not make a shared responsibility payment if you are exempt from the coverage requirement because you have income below the filing threshold.
  • If you do not have qualifying coverage or an exemption for the year, you will need to make an individual shared responsibility payment for each month without coverage or an exemption when you file your return. Examples and information about figuring the payment are available on the IRS Calculating the Payment page.