January 2016

Volume 4, Issue 1

Posted on 1/20/2016

HSA Eligibility Expanded for Veterans
Veterans are generally eligible for medical benefits through the Veterans Health Administration (VA).  Because the VA is not a high deductible health plan (HDHP), VA coverage raises HSA eligibility issues for veterans who are also covered under a HDHP.

The general rule (see Q/A-5) has always been that a veteran who is eligible for VA benefits, but has not actually received VA benefits in the preceding three months, can still be eligible to make or receive HSA contributions.  Veterans who have received medical benefits from the VA at any time during the previous three months are not HSA eligible.

The new change permits veterans enrolled in a HDHP (with no other disqualifying coverage) and who have a service-connected disability to make or receive HSA contributions regardless of when they received VA benefits.  In other words, veterans with a service-connected disability will not be blocked from HSA eligibility merely because they accessed VA benefits in the prior three months.

This HSA eligibility expansion for veterans is effective January 1, 2016. This topic will be covered in the IRA Update and Review that will be held on January 27 and during the HSA webinar on March 8. For more information or to purchase either webinar, click here
 
President Signs the 2015 PATH Act into Law and Permanently Extends Charitable Contribution for Taxpayers Over 70 1/2
President Obama signs the PATH Act into law and permanently extends the charitable contribution for taxpayers over 70 1/2. If your customer is over 70 1/2 this would have ended with 2014 taxes but now they can do it for any year into the future up to $100,000 tax free.

Your customer will put QCD (Qualified Charitable Distribution) on the 1040 and not add the income to taxes if the check is written and sent directly to the charity by the bank. The bank will code it out as a "7" normal and the account holder will handle on his or her taxes.

The 2015 PATH Act contains several pension- and benefits-related provisions, including permanent extensions of temporary tax provisions that had been routinely extended by Congress on a one- or two-year basis. Some of the provisions include:
  • Nontaxable IRA transfers to eligible charities made permanent.
  • Rollovers allowed from retirement plans to SIMPLE accounts.
  • Waiver of 10% early withdrawal tax for distributions made to public safety employees expanded to include additional categories of federal employees.
For more information on the PATH Act, click here.  This topic will be covered in the IRA Update and Review that will be held on January 27. For more information or to purchase, click here.
 
Help for International Taxpayers
The Internal Revenue Service reminds U.S. taxpayers living abroad, as well as other international taxpayers, that IRA.govprovides the best starting place for getting answers to their important tax questions. This filing season, six new YouTube videos on common issues that international taxpayers face are also available.
The International Taxpayers page on IRS.gov is packed with information designed to help taxpayers living abroad, resident aliens, nonresident aliens, residents of U.S. territories and foreign students. The web site also features a directory that includes overseas tax preparers.

International taxpayers will find the online IRS Tax Map and the International Tax Topic Index  to be valuable sources of answers for their tax questions. These online tools assemble or group IRS forms, publications and web pages by subject and provide users with a single entry point to find tax information.

More information on the tax rules that apply to U.S. citizens and resident aliens living abroad can be found in, Publication 54 , Tax Guide for U.S. Citizens and Resident Aliens Abroad, available on IRS.gov.

Mississippi Relief from Storms
The FDIC has announced a series of steps intended to provide regulatory relief to financial institutions and to facilitate recovery in areas of Mississippi affected by severe storms, tornadoes, straight-line winds, and flooding.

Statement of Applicability to Institutions with Total Assets Under $1 Billion: This Financial Institution Letter applies to all FDIC-supervised financial institutions.
Highlights:
  • Severe storms, tornadoes, straight-line winds, and flooding caused significant property damage in areas of Mississippi from December 23 to December 28, 2015.
  • A federal disaster for selected areas in the state of Mississippi was declared on January 4, 2016. Additional designations may be made after damage assessments are completed in the affected areas. A current list of designated areas is available at www.fema.gov.
  • The FDIC is encouraging banks to work constructively with borrowers experiencing difficulties beyond their control because of damage caused by the severe weather.
  • Extending repayment terms, restructuring existing loans, or easing terms for new loans, if done in a manner consistent with sound banking practices, can contribute to the health of the local community and serve the long-term interests of the lending institution.
  • Banks may receive favorable Community Reinvestment Act (CRA) consideration for community development loans, investments, and services in support of disaster recovery.
  • The FDIC also will consider regulatory relief from certain filing and publishing requirements.
Click here for more information or to view  FIL-1-2016 in its entirety.

Do you have a question or topic that you would like to see addressed in our monthly newsletter? If so, email us and let us know. Send questions and/or topic suggestions to info@bankersecampus.com.