What I’m Asking My Clients Regarding the ACA

Image courtesy of user Nemo on Pixabay.com
Image courtesy of user Nemo on Pixabay.com

The Affordable Care Act is understandably causing much angst among tax preparers. I’m one of those anguished preparers.

I’ve noticed, in looking at the stat tracking for this blog, that there are tax pros coming here in search of what questions they should be asking clients regarding the ACA. (Note: prior to this blog post, you won’t find this topic addressed in any prior posts by me, but somehow Google is directing people to my blog anyway.)

Here’s what I’m asking on the organizer I give to clients:

  1. Where did you obtain insurance: Employer; Insurance Exchange; Medicare/Medicaid; Private policy; I do not have insurance. (I also include in bold that they should be prepared to provide me a copy of their insurance card.
  2. If you were covered by insurance, were you covered all 12 months of 2014? If not, how many months were you uninsured?
  3. If you are married, was your spouse covered by insurance, and if so, where did they obtain coverage?
  4. Are your children or other dependents covered by insurance, and if so, where did they obtain coverage?
  5. If you are not covered by insurance, did you apply for a hardship exemption?
  6. If you receive a subsidy from an insurance exchange, please provide the Form 1095-A.
  7. If you happened to receive any other type of Form 1094 or 1095, please provide it.

Sometimes it feels like I should be asking more. But I honestly don’t know what those additional questions would be.

It’s been a slow start to the season for me, as I have only worked on 4 tax returns so far. All 4 taxpayers have insurance, and only one got insurance through an exchange. That taxpayer is waiting on the Form 1095-A before we can proceed. I don’t anticipate any ACA issues with that one or the other 3.

Almost all of my clients have insurance through employers, so I’m hoping — knock on wood — that the ACA might be just a nuisance and not a nasty part of tax season for me. But it’s still extremely early!

A Brief History of Marriage in the Tax Code, Part 2: Taxes in 1913

wedding-rings-150300_1280This post is part of a long-term project I’ve been working on regarding the history of marriage in the tax code.

As I finish sections of the research paper I’m working on, I’ll post them here. This is a big project, one that will likely take years, literally, to finish, so I can’t guarantee when the next post on this topic will appear.


In Part 1, I talked briefly about how taxes worked back in 1913. In this part, I want to dive a little deeper.

The tax brackets were broad from 1913 through 1916. For example, a tax rate of 1% applied to taxable income of $0-$20,000. Adjusted for inflation, a taxpayer could have income of nearly $465,000 and still be in the 1% range of the tax bracket.

The rate increased to 2% on income between $20,001-$50,000. The top rate was 7% and applied to taxpayers with taxable income of more than $500,000 (the modern-day equivalent of $11.6 million).

Dual-income married couples had little reason to file separately, because the vast majority of them fell in the 1% range of the tax bracket.

Example 1:

John and Jane are a married couple. John has taxable income of $10,000; Jane has taxable income of $5,000. In 1913, their tax-filing options were: file a joint return showing $15,000 of taxable income, or file separate returns. Either way, they would arrive at the same amount of tax owed:

  •         $10,000 x .01 =$100 tax; $5,000 x .01 = $50 tax; Total tax $150


  •         $15,000 x .01 = $150 total tax

In 1913, 97.6% of married couples filed joint returns (out of 278,835 tax returns filed by married couples in 1913, 272,153 were joint returns [or returns of one-income couples]; 6,682 were separate returns). Source: a study by a certain “Miss Coyle” in a Treasury Department staff memo. Ms. Coyle’s complete memo can be found at this link: http://taxhistory.tax.org/Civilization/Documents/marriage/hst28695/28695-1.htm

Exemption Amounts

Not only were the tax brackets broad, but many Americans were exempt from owing taxes because of generous exemption amounts. The exemption amounts were $3,000 for a single person or $4,000 for married couples (the equivalent of about $70,000 and $93,000 in modern-day dollars). A person with income below those amounts owed no tax and did not need to file a tax return.

Big Changes on the Horizon

America entered World War I in 1917. Wars take money. Congress changed the tax code with the Revenue Act of 1917.

Exemption amounts were slashed. The simple tax bracket of 1913 was replaced with a more progressive bracket with 21 marginal rates (yes, 21!) ranging from 2% to 67%.

Millions of people were drawn into the tax code, and taxes became more of a burden.

This ties into our discussion of marriage in the tax code.

We’ll dive deeper into the 1917 changes in Part 3.

5 Things You Didn’t Know About EAs, #5: EAs are the Only Pros Required to Take Tax CPE

adult-education-379219_1280The tax-preparation field has a lot of “wild west” characteristics. Anyone can prepare a tax return, whether they hold a license or not. A person need not even have any prior experience before preparing taxes for compensation.

Of all of the preparers in the tax world, only Enrolled Agents are required to take continuing education in taxes.

I have made comments, on this blog, about how dumb CPE can be. The fact that one can attend a 2-day seminar, sit in the back texting on their phone or playing on the internet, and still get 16 hours of CPE for just being there and not dying before the seminar ended.

But CPE is important … as long as the pro finds good CPE. That’s another discussion for another day.

The fact is, no other tax pros are required to get tax continuing education. In practice, most CPAs take tax continuing education too, but they aren’t required to. A CPA could get all of their CPE hours in accounting or other topics.

EA  Requirements

The IRS requires EAs to take 72 hours of CPE over a 3-year period (so 24 hours a year). The minimum we can take in any one year of that 3-year period is 16 hours.

NAEA Requirements

Those of us who are members of the National Association of Enrolled Agents are required to take 30 hours of CPE in order to remain a member of NAEA.


Enrolled Agents have been around since 1884, we can help you if you’re in trouble with the IRS, we’re tested over the entirety of the tax code, and we’re the only pros required to take continuing education in taxes.

So if you’re looking for a tax professional, may I suggest the humble, unknown EA (hopefully a little less unknown after this blog series) as being a good choice for you.

Image courtesy of Geralt on Pixabay.com

5 Things You Didn’t Know About EAs, #4: The SEE Isn’t a Tax Prep Exam

To become an EA, one must pass the Special Enrollment Exam.

Some people say EAs are the only “true tax experts” because we’re the only pros who are tested in tax preparation.

This is not exactly true.


The SEE is not a tax preparation exam.

The SEE is an exam that tests over the Internal Revenue Code but you are never asked to actually prepare a 1040.

So I think it’s better to say EAs are experts over the tax code rather than in tax preparation. To me, that’s a better selling point anyway because it shows we know the full scope of what’s happening with a person’s tax situation.

There are 3 parts to the SEE:

  1. Individual taxes
  2. Business taxes
  3. Representation and ethics

It’s been more than 5 years since I passed the SEE, but here are my recollections of each part.

Part 1

I recall questions about who qualifies as a dependent, filing status issues, and several questions about specifics of taxation of non-resident aliens. The non-resident alien questions threw me for a loop because it wasn’t covered in my study materials.

I remember distinctly that you had to know how to calculate the credit for daycare expenses by hand.

There were exactly 0 questions where you had to prepare a tax return or even calculate AGI. The questions were mainly about applying the rules. Who qualifies as a dependent? Does this taxpayer qualify for this tax credit?

Part 2

I loved Part 2. I actually thought it was fun. Yes, really.

This was the section on business taxes, and it was a fun brain exercise.

Question after question about calculating basis in an S-corp or partnership.

Question after question about depreciation and gain or loss on disposal of assets.

Part 3

I hated Part 3. Everyone downplays test sections over ethics because “it should be common sense.”

I don’t recall any questions where you were asked “what to do” in a certain scenario. Instead, it was all about memorizing form numbers. Knowing the difference between Form 433-A and 433-B, for example.

One of the more bizarre questions was: What do the letters of CAF (as in, a practitioner’s CAF Number) stand for? The answer is Centralized Authorization File. But the possible answers were written in such a way to totally confuse you. “Central Authorized File,” and so forth.


The test is taken at a testing center, and the computer tells you immediately whether or not you passed. Strangely, if you pass you are not told your score. You only get your score if you failed. If you pass, the computer simply says you passed, with no score given.

For more information about the SEE, visit the “Become an Enrolled Agent” page on the IRS website.

Image courtesy of Nemo on Pixabay.com