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Bears Business Brief – Individual Taxpayers and the ACA

By Kerri L. Tassin, J.D., CPA

Kerri Tassin
Kerri Tassin

Tax season 2015 brings with it some considerations resulting from recent additions to the Internal Revenue Code. New considerations include new forms, and changes to the Form 1040, created in response to the Affordable Care Act. While many taxpayers will simply check a box in response to the new requirements, others may need to make calculations and complete new tax forms.

The “Affordable Care Act” encompasses provisions from both the Patient Protection and Affordable Care Act (Public Law 111-148), as well as provisions from the Health Care and Education Reconciliation Act (Public Law 111-152). Both statutes were passed in 2010, but taxpayers will see changes to Form 1040, as well as new tax forms, incorporated into the 2014 tax return. These changes are in response to the creation of the Health Insurance Marketplace (“Marketplace”), and the requirement that nonexempt individuals maintain minimum essential health care coverage in compliance with Internal Revenue Code Section 5000A.

Taxpayers who maintained minimum essential coverage for themselves and their dependents throughout the entire year will check the box “Full-year coverage” on line 61 of Form 1040. Treasury Regulation Section 1.5000A-2 lists the types of coverage that qualify as minimum essential coverage. Minimum essential coverage may be obtained through certain government-sponsored programs, eligible employer-sponsored programs, individual market plans, and other health coverage plans.

Other taxpayers who purchased coverage through the Marketplace may qualify for a premium tax credit under Internal Revenue Code Section 36B. These taxpayers need to reconcile any advance credit payments received with the actual premium tax credit. Some taxpayers may have chosen to wait and claim any premium tax credit in its entirety on the tax return. Applicable taxpayers will calculate any premium tax credit and reconcile that calculation with any advance credit payments made to the taxpayer’s insurance company. The calculation and the reconciliation will be reported on Form 8962, Premium Tax Credit (PTC). In order to properly make the calculations related to the premium tax credit, taxpayers must use the information they will receive from the Marketplace on Form 1095-A, Health Insurance Marketplace Statement. Any excess advance premium tax credits received must be repaid, within certain limits for taxpayers whose household income is below 400 percent of the Federal Poverty Lines. Taxpayers who may have qualified for a higher premium tax credit may receive a refund.

Certain taxpayers may be exempt from the requirement to maintain minimum essential coverage. Taxpayers will use Form 8965, Health Coverage Exemptions, to indicate the appropriate exemptions. For example, taxpayers whose household income is less than their tax return filing threshold may claim an exemption. Other taxpayers may qualify for exemptions for unaffordable coverage, short coverage gaps, and certain hardships, to name a few. Some exemptions will be granted through the Marketplace, so taxpayers need to report the exemption certificate number for these exemptions on Form 8965.

IRC Section 5000A requires that taxpayers who did not maintain minimum essential coverage, and did not qualify for an exemption, calculate an individual shared responsibility payment. The penalty will be phased in over a three-year period, beginning with 2014. The penalty will increase for 2015, and again for 2016.

The material in this article is for informational purposes only and does not constitute written tax or legal advice. Please consult with your own tax adviser regarding your personal tax situation.

This article appeared in the April 18, 2015 issue of the Springfield News-Leader.  It is available online here.

Kerri Tassin, J.D., CPA, teaches tax accounting classes in the School of Accountancy at Missouri State University. She also serves as director of the MSU Public Service Tax Clinics. Email: kerritassin@missouristate.edu.

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Bears Business Brief – Climbing the ladder from brand unawareness to customer loyalty

By Amy Stokes, Ph.D.

Amy Stokes
Amy Stokes

Every brand desires loyal consumers who will, year after year and during periods of economic uncertainty or prosperity, continue to do business with them. The question, especially for new or smaller businesses, is how does a brand move from relative unawareness to having a loyal customer base? While it is imperative to begin with the fundamentals I have already written about (brand positioning, target marketing, message source), the next step comes from understanding the hierarchy of marketing communication effects. I’ll detail each of the rungs on the ladder and the steps you can take to reach each rung.

The lowest rung on the ladder, and consequently the least desirable point, is brand unawareness. That shouldn’t really take much explaining; it means consumers do not know your brand exists. While this is obviously a problem, if this is where you believe your brand currently resides in consumers’ minds, do not despair. There can actually be a benefit to this position upon which you can capitalize. If consumers know nothing about your brand, then you have a clean slate from which to begin consumer education about your brand position. You do not have to fight any preconceived notions or negative word-of-mouth, or try to overcome inaccurate assumptions. What you communicate with consumers is what they will know about you. So proceed from here with a defined purpose and a clear plan of what you want them to think about when they hear your brand mentioned.

The second rung on the ladder is brand awareness, which has three levels. Top-of-mind awareness is the pinnacle of brand awareness. Only one brand in a product category attains this status, and the first brand that comes to mind is the brand that holds this spot. For example, if I say “bank” and you say “Commerce,” then Commerce Bank is the one bank that has earned TOMA for you. The next level of awareness is brand recall. At this level, consumers think of your brand, when they think about the product category, without having to do any research or receive any prompts. The lowest form of awareness is brand recognition. This level requires either research or a prompt of some sort in order to jog consumers’ memories. Once the logo or the name is mentioned, consumers recognize it but they would not have been able to recall it of their own accord. The level of your brand’s awareness matters because it determines whether or not you make it into consumers’ consideration set when they are deciding among alternatives. A perfect example of this happened last year when my fiancé and I were in an accident that totaled our vehicle and required a tow truck. I had never had to use a towing company before, but when the responding officer asked which company we would like them to call, the company that held TOMA in the towing product category was the one I said. So Henry’s got the business.

Moving from awareness to the third rung, expectations, is considered the sweet spot of advertising. This is where consumers begin to understand how your brand will help them solve a problem, fulfill a need or bring them pleasure. An expectation of your brand is the result of successful awareness building and the necessary precursor to achieving the fourth rung, which is trial. Most consumers will not try a product or service unless they have an expectation of what that product is going to do for them. Ideal Image Laser Hair Removal has done a great job of generating an expectation in consumers’ minds while creating awareness. The expectation is so strong that consumers can envision what life would be like if they did not have to shave or worry about hair removal and maintenance on a daily basis. It is this expectation that leads them to trial. Achieving this rung is when your branding efforts begin to produce a return on your advertising investment because product/service trial means product/service purchase.

What happens after your new customers try the product is critical. Remember, they purchased it to try it because they had an expectation of it. If the product/service meets or exceeds their expectations, the positive attitudes and beliefs they had about it (based on their awareness) have now been reinforced or cemented based on personal experience. However, if their trial fails to meet their expectations, they now have a negative attitude (based on personal experience) that future advertising will be unable to reverse. This is why managing product/service failure and addressing customer feedback on social media is so important. Consumers trust their personal experience the most, followed closely by the recommendations from friends, family and other consumers.

The continued reinforcement of consumers’ positive attitudes and beliefs about your brand turns first-time or trial purchases into repeat purchases. Repeat purchases become habitual and before you know it your consumers are brand loyal and you have earned TOMA. As you are thinking about your brand’s position in this hierarchy, strategically plan how you can better communicate your brand position to create consumer expectations on which you can deliver. This plan will help you climb the ladder.

On a side note, I would like to thank those readers who have taken the time to write with positive feedback and questions. I appreciate your time and attention.

This article appeared in the April 11, 2015 issue of the Springfield News-Leader.  It is available online here.

Amy Stokes, Ph.D., is an assistant professor of marketing at Missouri State University and has experience as a media coordinator in private industry. Stokes has a specialty in advertising and media issues and writes about those areas as well as general consumer behavior. Email: amystokes@missouristate.edu.

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Bears Business Brief – Bullies aren’t just on the playground

By Elizabeth Rozel, Ph.D.

Elizabeth Rozell
Elizabeth Rozell

Two sad statistics were recently revealed: 35 percent of workers report having been bullied in the workplace, and 62 percent of employers ignore workplace bullying. If not addressed, workplace bullying can become part of a company’s culture because the company unintentionally allows aggressive behavior.

Workplace bullying can be defined as repetitive, deliberate, verbal, nonverbal or physical actions directed toward a co-worker with the intention to dominate or control that individual. Bullies can be persons of authority or an insecure or immature co-worker. Ignoring issues of workplace aggression is shortsighted and borders on negligence.

Changes in the work environment can trigger aggressive behavior. It has been shown that pay cuts or freezes, leadership changes and an increased number of part-time employees are associated with higher levels of employee bullying. Research notes that more time spent at work is also associated with increased incidents of bullying behaviors. Although males are more likely to engage in aggressive behaviors at work, research notes that older workers are less likely to engage in such behaviors. Other interesting research results on this topic include:

  • Supervisors constitute 72 percent of bullies
  • More men (62 percent) than women are bullies
  • Women are the most frequent targets of bullies (58 percent)
  • Female bullies more often target other women (80 percent)

Workplace bullying can manifest itself in a variety of behaviors including shouting or swearing at an employee, verbal abuse, social isolation, excessive micromanaging, having work contributions ignored, humiliation and excessive criticism or blame.

Too many bullying incidents that might have been prevented occur in today’s workplace. Here are a few managerial strategies to help curb bullying behaviors:

Selection. Encourage your organization to use personnel screening and testing to identify candidates who are less likely to behave aggressively. This proactive strategy prevents individuals who are predisposed to bullying from ever joining the organization.

Define bullying behavior. Organizations must explicitly define acceptable and unacceptable behaviors. A comprehensive understanding of bullying behaviors is a necessity.

Organizational consequences. Establishing policies regarding workplace aggression may aid in the prevention of such behaviors. One study reports that workers who thought their organizations would punish individuals exhibiting bullying behaviors were less likely to engage in such behavior. Explicit rules regarding appropriate behavior can help shape behavioral norms in the workplace.

Training. Providing training to increase awareness of bullying behavior is necessary for both supervisors and subordinates. The focus should teach employees methods for dealing with bullying behaviors. Training should provide information about reporting incidents and communicating management’s commitment to swiftly deal with aggressive behavior. Research notes that when personnel are trained about acceptable behavior and reporting procedures, eight out of 10 employees say that their organization deals with bullying that occurs.

Listen. The most important skill of all for dealing with bullying is listening and open communication. Managers and leaders who listen become aware of issues and problems and potentially high-risk situations.

Reduce stress. Studies show that stressful work environments are likely to contain bullying behaviors. Management should do their best to institute changes slowly and minimize stress in their organizations when possible.

Be a good role model. Leaders should model how to communicate effectively and appropriately. They should show how stress can be handled, how to be a good listener, and how to deal with conflict. It is important that subordinates see their leaders acting considerately and ethically.

This article appeared in the April 3, 2015 issue of the Springfield News-Leader.  It is available online here.

Elizabeth Rozell, Ph.D., is a professor of management and associate dean of the College of Business at Missouri State University. Rozell also holds the Kenneth E. Meyer Professorship and is director of the MBA program. Her specialties include organizational behavior, leadership and emotional intelligence. Email: erozell@missouristate.edu.

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Bears Business Brief – Estate planning: Your financial inventory

By Dr. James Philpot

James Philpot
James Philpot

Suppose a friend of yours has just died. You had previously agreed that when this time came, you would settle her estate. Once your initial shock and sadness passes, you might ask yourself, “Where do I begin?” In this column, we will consider an estate planning document that can help with this question — the financial inventory.

A financial inventory is a listing of all your financial accounts and contact persons. This listing can be an invaluable time saver for your executor (the person charged with carrying out a will’s terms) or, in the event of incapacity, your attorney-in-fact. A complete and current financial inventory will minimize the search for assets, liabilities, insurance policies and other items, saving time and money and ensuring that nothing is forgotten. In addition, the compilation of the financial inventory can help with lifetime financial planning by putting all of a person’s finances together in one view.

A well-constructed financial inventory will list the date it was compiled. It will also contain three types of information: accounts, papers and persons.

The accounts section of the financial inventory includes all financial accounts. These can be bank, brokerage, mutual fund, credit union, retirement pension and any other accounts. Liabilities like car notes, credit cards or mortgage or student loans should also be included. Very importantly, this section should also contain life, health, property and Social Security insurance information. For each item, it is common to list the name of the institution, the type of account, the account number and the institution’s contact information.

The papers section lists the location and description of important estate, financial and personal documents. Important estate documents can include the last will and testament, powers of attorney, trust instruments, marital agreements and military documents. A listing of real property deeds, tangible personal property titles and stock or other security certificates will typically also be included here. For each item, it is useful to list the location of the document and a brief description. For example, one item might read, “Prenuptial agreement — right desk drawer, filed under Marriage — limits wife’s claim to estate.”

Lastly, a financial inventory will include the names and contact information of persons who should be notified at your death. Your estate has an interest in notifying many persons, and many people do not regularly read obituaries, so this contact list will be helpful. In addition to distant friends and relatives, this list could include attorney(s), accountant(s), clergy, employer, former spouse(s) and other interested persons.

Once the financial inventory is completed, it should be stored carefully. The inventory should be kept in a place that can be accessed reasonably easily and quickly when needed. However, because the inventory contains significant and sensitive financial information, it should be stored in a place that is also secure. One or two well-trusted friends should know the location of your financial inventory and how it can be accessed.

Plenty of templates are available to guide the construction of your financial inventory. Two good online templates can be found at http://www.caringinfo.org/files/public/My_Financial_Inventory.pdf and at http://vanguard.com/pdf/amspfi.pdf .

This article appeared in the March 28, 2015 issue of the Springfield News-Leader.  It is available online here.

Dr. James Philpot, CFP is associate professor of finance at Missouri State University. Views expressed in this article reflect those of the author, have been distributed for educational and informational use only, and are not to be construed as legal advice.

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University accounting programs ranked high in affordability

Accounting Classroom
Accounting Classroom

Accounting Degree Review, a website that reviews and ranks the best accounting programs across the nation, placed Missouri State University’s accounting programs in the top five schools for affordability.

The undergraduate program was ranked fourth, while the graduate program was ranked second.

“We are proud of both the quality and affordability of our accounting program here at Missouri State,” said Dr. Stephanie Bryant, dean of the College of Business. “Accounting is a hot area and jobs are relatively plentiful. Being so affordable allows more students access to a great education and great career.”

Accounting Degree Review researches and reviews those schools that are accredited in accounting by the Association to Advance Collegiate Schools of Business (AACSB), the premier accreditation agency in the world for business and accounting programs. There are currently 170 schools with this accreditation.

View the undergraduate and graduate program rankings.

Accounting Degree Review compared schools by looking at their annual tuition and out-of-state fees for incoming freshman enrolling in the 2014-2015 academic year. There were 30 schools that made the list.

For more information, contact Bryant at (417) 836-4408.

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