Tax Paying and Lifetime Learning Credits

Presented by Paystrubmakr.com      By John Wolf and Tom Collen CPA

Learning credits are essential to you, read about:

Hope and Lifetime Learning Credits §25A

Lifetime Learning Credit, §25A(a)(1) In 2018, the maximum amount of Lifetime Learning credit you can claim is $2,000 (i.e., 20% of the first $10,000 of qualified education expenses) per taxpayer return (§25A(c)(1)). The credit applies to all years (not just the first four years of post-secondary education) in which the taxpayer pays qualified expenses.

 

Phase Out – §25A(d)(2)

For 2018, the Lifetime Learning credit amount that a taxpayer may otherwise claim is phased out beginning at $57,000 ($114,000 for joint returns) modified AGI and is eliminated at $67,000 ($134,000 for joint returns) modified AGI (R.P. 2017-58).

Hope (with American Opportunity modifications) Credit §25A(b)(1)

In 2008, the maximum amount of Hope credit a taxpayer could claim was $1,800 ($3,600 if a student in a Midwestern disaster area) per student. For 2009 through 2017, the Hope credit was modified and increased by provisions now referred to as the “American Opportunity Tax” credit (§25A(1)).
In 2015, these American Opportunity tax credit (“AOTC”) modifications to the Hope credit were made permanent.

As a result, the allowable credit (as modified ) is up to ” $2,500 per eligible student per year for qualified tuition and related expenses paid for each of the first four years of the student’s post-secondary education in a degree or certificate program.”

The amount of credit for each eligible student is the sum of:

(1) on 100% on the first $2,000 of qualified tuition and related expenses paid for the eligible student, and
(2) 25% on the $2,000 of qualified tuition and related expenses
(maximum credit $2,500) paid for that student.

Note: For purposes of the modified credit, the definition of qualified tuition and related expenses was expanded to include course materials.
The Tax Increase Prevention Act of 2014 (H.R. 5771) clarified that the
inclusion of course materials applies only to the American Opportunity  Credit (i.e., Hope) Scholarship Credit and not to the Lifetime Learning Credit.

Accordingly, the maximum American Opportunity Tax Credit allowable under §25A(b)(1) for taxable years beginning in 2018 is $2,500 (same as 2017).

Phase Out – §25A(d)(2

The credit is phased out proportionally for taxpayers with modified adjusted gross income with $80,000 and $90,000 ($160,000 and $180,000 for married taxpayers filing a joint return). The credit can be claimed against a taxpayer’s alternative minimum tax liability.

26 CFR 601.602 Tax forms and instructions.

Refundable
Forty percent of a taxpayer’s otherwise allowable modified credit was refundable. However, no portion of the modified loan was refundable if the taxpayer claiming the credit was a child to whom §1(g) applies for such taxable year (generally, any child under age 18 or any child under age 24 who is a student providing less than one-half of his or her support, who has at least one living parent and does not file a joint return).

Educational Savings Bonds – §135

Since 1990, a tax exemption has been provided for interest on U.S. savings bonds used to finance the higher education of taxpayers, their spouses, or their dependents. However, if the redemption proceeds (principal and interest) exceed the educational expenses, only a pro-rata portion of the interest will qualify.
For 2018, the amount of the interest exclusion is phased out (gradually reduced) if your filing status is married filing jointly or qualifying widow(er) and your modified adjusted gross income (MAGI) is between $119,300 (up from $117,250 in 2017) and $149,300 (up from $147,250 in 2017). You cannot take the deduction
if your MAGI is $149,300 or more (up from $147,250 in 2017).
For all other filing statuses in 2018, the interest exclusion is phased out if your MAGI is between $79,550 (up from $78,150 in 2017) and $94,550 (up from $93,150 in 2017). You cannot take a deduction if your MAGI is $94,550 (up from $93,150 in 2017) or more (R.P. 2018-18).

Student Loan Interest Deduction – §221

In 2018 & 2017, the maximum deduction allowed for educational loan interest is $2,500. This amount is not adjusted for inflation.
Phase Out In 2018, the $2,500 maximum deduction for interest paid on qualified education loans under §221 begins to phase out for taxpayers with modified adjusted gross income more than $65,000 ($135,000 for joint returns), and is completely phased out for taxpayers with modified adjusted gross income of $80,000 or more ($165,000 or more for joint returns). These phaseout thresholds are adjusted each year for inflation in increments of $5,000 (R.P. 2017-58).

Discharge Of Student Loan Indebtedness – §108

Any debt that is forgiven constitutes income. That includes student loans, even if such loans are forgiven on account of death or disability. Under an exception to this general rule, gross income does not include any amount from the forgiveness (in whole or in part) of certain student loans, provided that the pardon is contingent on the students working for a certain period in certain professions for any of a broad class of employers (§108).
From 2018 through 2025, the TCJA modifies the exclusion of student loan discharges from gross income, by including within the exclusion of certain releases on account of death or disability. Loans eligible for the exclusion under the provision are loans made by:
(1) the United States (or an instrumentality or agency thereof),
(2) a State (or any political subdivision thereof),
(3) certain tax-exempt public benefit corporations that control a State, county, or municipal hospital and whose employees have been deemed to be federal employees under state law,
(4) an educational organization that initially received the funds from which the loan was made from the United States, a State, or a tax-exempt public benefit corporation, or
(5) private education loans (for this purpose, private education loan is defined in §140(7) of the Consumer Protection Act).
Under the provision, the discharge of a loan, as described above, is excluded from gross income if the release was according to the death or total and permanent disability of the student. Additionally, the provision modifies the gross income exclusion for amounts received under the National Health Service Corps loan repayment program.

Section 108.—Income from Discharge of Indebtedness

Foreign Earned Income Exclusion – §911

A qualifying individual who lives and works abroad may elect to exclude from gross income a certain amount of foreign earned income attributable to his or her residence in a foreign country during the tax year. For 2018, this foreign earned income exclusion amount under §911 is $103,900 or $279.73* per day
(R.P. 2018-18).

Rehabilitation Credit Modified

A taxpayer may claim a credit for expenses incurred to rehabilitate old and historic buildings. Qualified rehabilitation expenditures generally include reconstruction, renovation, and restoration but not enlargement or new construction.

A 20% credit is allowed for qualified rehabilitation expenditures concerning a certified historic structure, while a 10% credit is allowed for qualified rehabilitation expenditures relating to a capable rehabilitated building (§47). To be eligible for the 10% credit, the rehabilitation expenditures during the 24 months selected by the taxpayer and ending within the tax year must exceed the greater of the adjusted basis of the building (and its structural components) or $5,000.

For 2018 and later, the 10% credit for pre-1936 buildings is null, but the 20% credit for qualified rehabilitation expenditures concerning a certified historic structure is invalid with a modification. The credit allowable for a taxable year

during the five years beginning in the taxable year in which the qualified rehabilitated building is placed in service is an amount equal to the ratable share.

The ratable share for a taxable year during the five years equals 20% of the qualified rehabilitation expenditures for the building, as allocated ratably to each taxable year during the five years. It is the sum of the ratable shares for the taxable years during the five years that does not exceed 100% of the credit for qualified rehabilitation expenditures

for the capable rehabilitated building.

Comment: In short, the 20% credit for rehabilitating historic structures is now claimed ratably over five years, and the 10% credit for rehabilitation of non-historic structures first placed in service before 1936 is not existing.

Conservation Base Expansion – §170(b)

 

Generally, a deduction has permission if it is charitable contributions, subject to certain limitations that depend on the type of taxpayer, the property contributed,

and the donee organization. The deduction amount generally equals the fair market value of the contributed property on the contribution date. Charitable deductions exist for income, estate, and gift tax purposes (§§170, 2055, and 2522, respectively).

Deductible contributions of capital gain property to charitable organizations such as public charities, certain private foundations, and specific governmental units are generally limited to 30% of a taxpayer’s contribution base. However, for contributions of appreciated capital gain real property (including partial in-

interests) to qualified charities for conservation purposes, the 30% contribution base limitation on contributions of capital gain property by individuals does not apply to eligible conservation contributions. Instead, individuals can deduct the fair market value of any eligible conservation contribution to an organization described in §170(b)(1)(A) to the extent of the excess of 50% of the contribution base over the amount of all other allowable charitable contributions and are permitted an extended carryforward period (§170(b)(1)(E)).

Note: In the case of an individual who is a qualified farmer or rancher for the taxable year in which the contribution is made, an eligible conservation contribution is deductible up to 100% of the excess of the taxpayer’s contribution base over the amount of all other allowable charitable contributions.

This provision should expire in 2015. However, the PATH Act reinstated and permanently increased percentage limits and extended the carryforward period for qualified conservation contributions for contributions made in taxable years beginning after 2014.

Definitions

A qualified conservation contribution is a contribution of a qualified real property interest to an eligible organization exclusively for conservation purposes.
A qualified real property interest is defined as (1) the entire interest of the donor other than a qualified mineral interest; (2) a remainder interest; or (3) a
restriction (granted in perpetuity) on the use that may be made of the real property.
Qualified organizations include specific governmental units, public charities that meet certain public support tests, and specific supporting organizations.
Conservation purposes include: (1) the preservation of land areas for outdoor recreation by, or for the education of, the general public; (2) the protection of a relatively natural habitat of fish, wildlife, or plants, or similar ecosystem; (3) the preservation of open space (including farmland and forest land) where such protection will yield a significant public benefit and is either for the scenic enjoyment of the general public or according to a clearly delineated
Federal, State, or local governmental conservation policy; and (4) the preservation of a historically significant land area or a certified historic structure.

26 U.S. Code § 108.Income from discharge of indebtedness

Grandfathered Archer Medical Savings Accounts – §220

After December 31, 2007, you cannot be treated as an eligible individual for Archer MSA purposes unless:
(1) you were an active participant for any taxable year ending before January
1, 2008, or
(2) you become an active participant for a tax year ending after December
31, 2007, because of coverage under a high deductible health plan of an Archer MSA participating employer.
For Archer MSA purposes in 2018, the minimum annual deductible of a high-deductible health plan is $2,300 ($4,550 for family coverage). The maximum annual deductible of a high-deductible health plan is $3,450 ($6,850 for family coverage). The maximum out-of-pocket expenses limit is $4,550 ($8,400 for family coverage).

 

Medical Expense Deduction – §213

Since 2013, because of the 2010 health care legislation, unreimbursed medical expenses are subject to a 10% (up from 7.5% in 2012) of AGI threshold. However, for tax years 2017 and 2018, the threshold for deducting medical expenses is reduced to 7.5% of AGI for all taxpayers. For these years, this threshold applies for purposes of the AMT in addition to the regular tax.
Comment: A taxpayer whose AGI exceeds a threshold typically must reduce the amount of his or her itemized deductions. However, the phaseout for itemized deductions is temporarily repealed for tax years after 2017 and before 2026.

Personal Casualty Losses Repealed

A taxpayer may generally claim a deduction for any loss sustained during the taxable year, not compensated by insurance or otherwise. For individual taxpayers, deductible losses must be taken into account in a trade or business or other profit-seeking activity or consist of property losses arising from fire, storm, shipwreck,

or another casualty or theft.

Personal casualty or theft losses were deductible only if they exceeded $100 per casualty or theft. Also, aggregate net casualty and theft losses were deductible only to the extent they exceeded 10% of an individual taxpayer’s adjusted gross income (§165).

From 2018 through 2025, the deduction for personal casualty losses is null. A taxpayer may claim a personal casualty loss (subject to §165) only if such failure is attributable to a disaster declared by the President under §401 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act.

Note: A taxpayer can still claim personal casualty losses not attributable to federally declared disasters to offset any personal casualty gains from 2018 through 2025.

Wagering Losses Limited

A taxpayer may claim an itemized deduction for losses from gambling, but only to the extent of gambling winnings. However, taxpayers may claim other deductions connected to gambling that are deductible regardless of gambling winnings.
For 2018 through 2025, all deductions for expenses incurred in carrying out wagering transactions (not just gambling losses) are limited to the extent of wagering winnings.

Note: The change clarifies that the limitation on losses from wagering transactions applies not only to the actual costs of wagers incurred by an individual but to other expenses incurred by the individual in connection with the conduct of that individual’s gambling activity. For instance, an individual’s otherwise deductible expenses in traveling to or from a casino are subject to the limitation under §165(d).

Health Savings Accounts (HSAs) – §223

A health savings account (HSA) is a tax-exempt trust or custodial account that you set up with a U.S. financial institution (such as a bank or an insurance company), which allows you to pay or be reimbursed for certain medical expenses. This account must be used in conjunction with a high deductible health plan
(HDHP).

High Deductible Health Plan (HDHP)

For taxable years beginning in 2017, the term “high deductible health plan” (HDHP) means a health plan that has an annual deductible that is not less than $1,350 for self -only coverage or $2,700 for family coverage, and the annual out-of-pocket expenses (deductibles, co-payments, and other amounts, but not premiums) do not exceed $6,650 for self-only coverage or $13,300 for family coverage (R.P 2017-37).

Annual Limit On Contributions

For HSA purposes in 2018, the minimum annual deductible of an HDHP is $1,350 ($2,700 for family coverage), and the maximum annual deductible and other out-of-pocket expenses limit is $6,650 ($13,300 for family coverage). In 2018, the maximum HSA contribution is $3,450 ($6,850 for family coverage) (R.P. 2018-18). The maximum additional contribution for individuals age 55 or older (but less than 65) is $1,000 (§223(b)(3)).

Type of Coverage	Rule	2017	2018
Individual	Maximum contribution	$3,450.00	$3,400.00
	Minimum deductible	$1,350.00	$1,300.00
	Out-of-Packet maximum	$6,650.00	$6,550.00
Family	Maximum contribution	$6,850.00	$6,750.00
	Minimum deductible	$2,700.00	$2,600.00
	Out-of-Pocket Maximum	$13,300.00	$13,100.00

Interaction with Obamacare

It is possible to pair health savings account with the high deductible plans under Obamacare. The exchanges under Obamacare offer plenty of such high deductible plans, including ones that are specifically designated for use with HSAs. For example, “bronze level” policies have high out-of-pocket costs with deductibles currently running $4,500 for an individual and $9,000
for a family. However, Obamacare prohibits using HSA funds to buy nonprescription medications and raises the penalty for using HSA money for nonmedical purposes from 10% to 20%.

How do the Affordable Care Act and Medicare interact?

Long-Term Care Premiums – §213(d)(10)

Amounts paid for insurance covering qualified long-term care services can be treated as medical expenses subject to dollar limits that vary with the age of the taxpayer as of the close of the tax year.
For 2017, taxpayers can include qualified long-term care premiums, up to the amounts shown below, as medical expenses on Schedule A (Form 1040).

Age 40 or under – $410.
Age 41 to 50 – $765.
Age 51 to 60 – $1,530.
Age 61 to 70 – $4,090.
Age 71 or over – $5,110 (R.P. 2016-55).

For 2018, taxpayers can include qualified long-term care premiums, up to the amounts shown below, as medical expenses on Schedule A (Form 1040).

Age 40 or under – $420.
Age 41 to 50 – $780.
Age 51 to 60 – $1,560.
Age 61 to 70 – $4,160.
Age 71 or over – $5,200 (R.P. 2017-58).

This limitation is for each person.

Long-Term Care Payments – §7702B(d)(4)

The limit on the exclusion (as to amounts received for personal injuries and sickness) for payments made on a per diem or another periodic basis under a long-term care insurance contract is $360 for 2018 (same as in 2017) per day (R.P.
2017-58). The limit applies to these payments and any accelerated death benefits made on a per diem or another periodic basis under a life insurance contract because the insured is chronically ill. Under this limit, the excludable amount for any period depends on subtracting any reimbursement received (through insurance or otherwise) for the cost of qualified long-term care services during the period from the larger of the following amounts:
(1) the cost of qualified long-term care services during the period, and
(2) the dollar amount for the period ($360 per day for any period in 2018).

ABLE Accounts – §529A

As enacted by the Achieving a Better Life Experience Act of 2014 (“ABLE”)

and effective starting in 2015, §529A provides rules for a new type of tax-advantaged savings program to be known as a qualified ABLE program. A capable ABLE program is established and maintained by a State, agency, or instrumentality thereof. A capable ABLE program is generally exempt from income tax but is subject to unrelated business income provisions. Contributions accumulate on a tax-deferred basis.

The §529A program permits individuals to contribute cash to an ABLE account, invest the money, and take tax-free distributions for disability expenses.

Note: In June of 2015, the IRS issued proposed regulations (REG-102837-

15) on ABLE programs.

Qualified ABLE Program

A qualified ABLE program must meet certain conditions, including the following:

(1) under the provisions of the program, contributions are made to an account (an “ABLE account”), established to meet the qualified disability expenses of the designated beneficiary of the bill;

(2) the program must limit a designated beneficiary to one ABLE account; and

(3) the program must allow for the establishment of ABLE accounts only for designated beneficiaries who are either resident of the State maintaining such ABLE program (a “program State”) or residents of a State that has not established an ABLE program (a “contracting State”) which has entered into a contract with a program State to provide the contracting State’s residents with access to the program State’s ABLE program.  ABLE Accounts – Tax Benefit for People with Disabilities

Contributions

Contributions to an ABLE account must be made in cash and are not deductible. An ABLE account must provide that it may not receive aggregate contributions during a taxable year in excess of the annual gift tax exclusion amount ($15,000 for 2018).

For tax years 2018 through 2025, after the overall limitation on contributions is reached, an ABLE account’s designated beneficiary may contribute an additional amount, up to the lesser of:
(a) the Federal poverty line for a one-person household; or
(b) the individual’s compensation for the taxable year.
Additionally, the TCJA temporarily allows a designated beneficiary of an ABLE account to claim the saver’s credit for contributions made to his or her ABLE account.

Distributions

Amounts distributed from a qualified ABLE account are includible in the gross income of the distributee as provided in §72. Thus, if the distributions from a qualified ABLE account do not exceed the qualified distribution expenses of the designated beneficiary, no amount is includible in gross income.

If the distributions exceed the qualified distribution expenses, the amount otherwise includible in gross income is reduced by an amount which bears the same ratio to the distributed amount as the qualified disability expenses bear to that amount. The portion of any distribution that is includible in gross income is subject to an additional 10% tax unless made after the death of the beneficiary.

Example

Assume a qualified ABLE account with a balance of $100,000
(of which $50,000 consists of contributions) distributes
$10,000 to a beneficiary who has incurred $6,000 of qualified disability expenses. Under §72, one-half of the distribution ($5,000) is included in gross income. This $5,000 amount otherwise includible in gross income is reduced by $3,000
($6,000/$10,000 multiplied by $5,000) to $2,000. An additional tax of $200 (ten percent of $2,000) is imposed on the distribution.

Rollover
Amounts in an ABLE account may be rolled over without income tax liability to another ABLE account for the same beneficiary or another ABLE account for the designated beneficiary’s brother,  sister, stepbrother or stepsister who is also an eligible individual.

PATH Act Modification

For taxable years beginning after December 21, 2014, the PATH Act eliminated the requirement that ABLE accounts may be established only in the State of residence of the ABLE account owner.

PATH also allows amounts from §529 accounts to be rolled over to an ABLE account without penalty. However, such rolled-over amounts count towards the overall limitation on amounts that can be contributed to an ABLE.

Affordable Care Act (“Obamacare”)

The Affordable Care Act contains health insurance coverage and financial assistance options for individuals and families. The IRS administers the tax provisions included in the law.

Mandates
Individual – Repealed in 2019

The Affordable Care Act includes the individual shared responsibility provision which requires taxpayers, their spouse, and dependents to have qualifying health insurance for the entire year, report a health coverage exemption, or make a payment when they file. The individual shared responsibility provision requires individuals and family members to do one of the following:
(1) have qualifying health coverage called minimum essential coverage;
(2) qualify for a health coverage exemption, or
(3) make a shared responsibility payment when filing their federal income tax return.

Note: For any month during the year that an individual or their dependents don’t have minimum essential coverage and don’t qualify for a coverage exemption, the individual must make an individual shared responsibility payment. Individuals do not report any liability for failing to carry minimum essential coverage until they file their return.

A penalty (often called the “shared responsibility payment”) is imposed on individuals for each month they fail to maintain minimum essential coverage for themselves and their dependents (§5000A) 38For the calendar year 2018, the applicable dollar amount used to determine this penalty is $695 (same as 2017). However, starting in 2019, the amount of the individual responsibility payment, enacted as part of the Affordable Care Act, is reduced zero, effectively repealing the mandate or tax.

Health Plan Coverage Credit – §36B

Taxpayers may be eligible for a §36B premium tax credit to offset coverage costs if they purchased health coverage through the Health Insurance Marketplace.
Note: In addition, certain individuals and families receiving the tax
credit may be eligible for cost-sharing subsidies to reduce their out of pocket costs (e.g., deductibles, copays) when receiving health services In January 2013, final regulations (TD 9611) were issued on this premium assistance tax credit followed by proposed regulations (NPRM
REG-125398-12) issued in May 2013 clarifying “minimum value” (MV) under §36B.
Note: In June 2015, the U.S. Supreme Court in King v. Burwell ruled
that the premium tax credits are available to all qualified individuals who enroll in exchange plans and meet the necessary income and other requirements, regardless of whether the exchange is administered by the state or the federal government.
For 2018, the limitation on the tax imposed under §36B for excess advance credit payments is determined using the following table:

Employers
The Affordable Care Act contains benefits and responsibilities for employers depending on the size and structure of the workforce.
Small Employers – Fewer Than 50 Employees If an employer has fewer than 50 full-time employees (FTEs), they:

1) can purchase affordable insurance through the Small Business
Health Options Program (SHOP);
(2) must withhold and report an additional 0.9 percent on employee
wages or compensation that exceed $200,000;
(3) may be required to report the value of the health insurance coverage provided to each employee on his or her Form W-2;
(4) if they provide self-insured health coverage to employees, must
file an annual return reporting certain information for each covered
employee; and
(5) maybe eligible for the Small Business Health Care Tax Credit if
they cover at least 50% of their full-time employee’s premium costs
and have fewer than 25 full-time equivalent employees with average annual wages of less than $50,000.

Note: This credit can be reduced in certain circumstances, including
when the average annual full-time equivalent wages per employee are more than $26,700 for 2018 (up from $26,000 in 2017).

Large Employers – 50 or More Full-time Employees

 

The Affordable Care Act requires employers with 50 or more FTEs to
offer health coverage that meets affordability and adequacy standards for their full-time employees and those workers’ dependents. If an employer has 50 or more full-time employees, they:
(1) can purchase affordable insurance through the Small Business
Health Options Program (SHOP);
(2) must withhold and report an additional 0.9 percent on employee
wages or compensation that exceed $200,000;
(3) may be required to report the value of the health insurance coverage provided to each employee on his or her Form W-2;
(4) must file an annual return reporting whether and what health insurance is offered to employees;
(5) if they provide self-insured health coverage to their employees,
they must file an annual return reporting certain information for
each covered employee; and
(6) may have to make a payment if they do not offer adequate, affordable coverage to full-time employees, and one or more of those employees get a premium tax credit.

Excise Payment Penalties – §4980H

Large Employers Not Offering Health Coverage – §4980H(a)
In 2018, the monthly assessable payment imposed under
§4980H(a) on applicable large employers failing to offer their full-
time employees (and their dependents) the opportunity to enroll
in minimum essential coverage under an eligible employer-
sponsored plan for any month is the product of 1/12 of 2,320 in
2018 (up from $2,260 in 2017) and the number of individuals em-
ployed by the employer as full-time employees during such month
reduced by 30 (down from 80 in 2015).

Large Employers Offering Coverage With Employees Who
Qualify For Premium Tax Credits Or Cost-Sharing Reductions – §4980H(b)

In addition, the monthly assessable payment imposed under
§4980H(b) on applicable large employers is the product of 1/12 of
$3,480 in 2018 (up from $3,390 in 2017) and the number of individuals certified to the employer as having enrolled for such month in a qualified health plan with respect to which an applicable premium tax credit or cost-sharing reduction is allowed or paid.

Large Employer Mandate Regulations In January 2013, proposed employer mandate regulations (NPRMREG-138006-12) were issued defining an applicable large employer (ALE), hours of service, and its application to new employers.

However, in July 2013, the Obama administration declared that the employer mandate would not apply until 2015. In response, the IRS immediately issued transition relief providing that information reporting under §6056 was optional for 2014.
Marketplaces & The Protecting Affordable Coverage for Employees Act The Affordable Care Act establishes competitive private health insurance exchanges (also known as marketplaces) through which individuals are able to compare and enroll in qualified health plans. Small employers with fewer than 25 full-time equivalent employees (FTEs) may also use these exchanges to purchase insurance coverage for their employees and may qualify for a tax credit to help cover the cost of providing that coverage.

Under the Affordable Care Act, employers with 51 to 100 employees are small employers for purposes of these health insurance markets, but before January 1, 2016, states had the option to treat them as large employers. In October 2015, the Protecting Affordable Coverage for Employees Act  (PACE) amended the Affordable Care Act to include employers with 51 to 100 employees as large employers for purposes of health insurance markets. However, states have the option to treat these employers as small employers.

Medical Device Excise Tax

Effective for sales after December 31, 2012, a tax equal to 2.3% of the sale
price was imposed by the health act on the sale of any taxable medical device
by the manufacturer, producer, or importer of such a device. The lease of a
the medical device is generally considered to be a sale of such a device.

A taxable medical device is any device, as defined in section 201(h) of the
Federal Food, Drug, and Cosmetic Act, intended for humans. The excise tax
does not apply to eyeglasses, contact lenses, hearing aids, or any other medical device of a type that is generally purchased by the general public at retail
for individual use (“retail exemption”)
The PATH Act suspended the medical device excise tax for a period of two
years, for sales on or after January 1, 2016, and before January 1, 2018.

Expatriation – §877A

For 2018, under §877A(g)(1)(A), unless an exception under § 877A(g)(1)(B) applies, an individual is a covered expatriate if the individual’s “average annual net income tax” under §877(a)(2)(A) for the five taxable years ending before the expatriation date is more than $165,000. In addition, for 2018, the amount that would be includible in the gross income of a covered expatriate by reason of § 877A(a)(1) is reduced (but not below zero) by $711,000.

Failure to File Tax Return – §6651

For tax years beginning in 2018, the amount of the additional tax under §6651(a) for failure to file a tax return within 60 days of the due date of such return (determined with regard to any extensions of time for filing) shall not be less than the lesser of $210 or 100% of the amount required to shown as tax on such returns.

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