Congress has approved the extension of Bush-era individual and capital gains/dividend tax cuts for all taxpayers for two years. President Barack Obama signed the bill today, December 17.
The bill also provides for an AMT "patch", a one-year payroll tax cut, 100 percent bonus depreciation through 2011 and 50 percent bonus depreciation for 2012, a top federal estate tax rate of 35 percent with a $5 million exclusion, and more.
We'll keep you posted on other developments affecting the 2011 tax season as they occur.
Be sure to call soon for your tax appointment! Happy Holidays and I will see you soon!
Thursday, December 30, 2010
Saturday, October 30, 2010
Employer-Provided Health Coverage — Not Taxable in 2011
I have heard from several clients and other consumers that they believe our health care coverage is now taxable. This is NOT true (yet, anyway).
Starting in tax year 2011, the Affordable Care Act requires employers to report the value of the health insurance coverage they provide employees on each employee's annual Form W-2. However, to provide employers the time they need to make changes to their payroll systems or procedures in preparation for compliance with this requirement, the IRS will defer the reporting requirement for 2011, making that reporting by employers optional in 2011.
The revised Form W-2 for 2011 is now available in draft for viewing. This is the W-2 that most employees will receive in early 2012. The draft form includes the codes that employers may use to report the cost of coverage under an employer-sponsored group health plan.
This reporting is for informational purposes only, to show employees the value of their health care benefits so they can be more informed consumers. The amount reported does not affect tax liability, as the value of the employer contribution to health coverage continues to be excludible from an employee's income, and it is not taxable.
If you have any questions, feel free to call or e-mail me. You may also obtain more information at www.irs.gov
Starting in tax year 2011, the Affordable Care Act requires employers to report the value of the health insurance coverage they provide employees on each employee's annual Form W-2. However, to provide employers the time they need to make changes to their payroll systems or procedures in preparation for compliance with this requirement, the IRS will defer the reporting requirement for 2011, making that reporting by employers optional in 2011.
The revised Form W-2 for 2011 is now available in draft for viewing. This is the W-2 that most employees will receive in early 2012. The draft form includes the codes that employers may use to report the cost of coverage under an employer-sponsored group health plan.
This reporting is for informational purposes only, to show employees the value of their health care benefits so they can be more informed consumers. The amount reported does not affect tax liability, as the value of the employer contribution to health coverage continues to be excludible from an employee's income, and it is not taxable.
If you have any questions, feel free to call or e-mail me. You may also obtain more information at www.irs.gov
Business Tax Alert: New Tanning Tax Due Nov. 1
For businesses that provide tanning services, the first payment of the new 10% tanning tax is due Monday, November 1, 2010. The payment is made along with Form 720, Quarterly Federal Excise Tax Return. The tax went into effect on July 1, 2010. Providers of indoor tanning services collect the tax at the time the purchaser pays for the tanning services. The provider then pays these amounts to the government, quarterly, along with IRS Form 720. If you have qustions, please gfeel free to call or e-mail me.
Sunday, May 30, 2010
American Jobs and Closing Loopholes Act
House Leaders Release $56 Billion Expanded Tax Extenders Bill — Quick Passage Anticipated
A third piece of major tax legislation to come from Congress already in 2010 is poised to pass quickly. In a move to swiftly resurrect a waning tax extenders bill, House leaders have released an expanded $56 billion version, titled the “American Jobs and Closing Tax Loopholes Act”, for expected passage prior to Memorial Day. The Act includes more than 50 individual, business, charitable and energy extenders. It also extends unemployment insurance through December 31, 2010 and provides for national disaster and pension funding relief. The new extenders bill also contains a set of revenue offsets on which both House and Senate Democratic leaders appear to ready to finally agree – key to its quick enactment.
The American Jobs and Closing Loopholes Act includes:
• Individual extenders, including: deductions for real property taxes, state and local sales tax, higher education tuition, and teacher’s classroom expenses
• Business extenders, including: refundable AMT credits, research tax credit, differential pay credit, qualified leasehold improvements, qualified restaurant property, retail improvement property, regulated investment companies, and many more
• Charitable extenders covering: IRA contributions to charity, conservation contributions of real property, contributions of food inventory, S Corporations’ charitable contributions, controlling exempt organizations, and more
• Energy extenders, including: alternative motor vehicle credit for heavy hybrids, credits for biodiesel and renewable diesel fuel, and credits for national gas/liquefied petroleum gas used as transportation fuel
• National Disaster Relief
• Infrastructure Incentives, including: enhancements to the Build America Bonds program, and New Markets Tax Credit Program
• International Reforms
• Extended COBRA subsidy
• Change in Taxation of Carried Interest
Upon Passage of the bill by Congress, I will get more information and a full briefing to you!
Check back soon for more tax updates!
A third piece of major tax legislation to come from Congress already in 2010 is poised to pass quickly. In a move to swiftly resurrect a waning tax extenders bill, House leaders have released an expanded $56 billion version, titled the “American Jobs and Closing Tax Loopholes Act”, for expected passage prior to Memorial Day. The Act includes more than 50 individual, business, charitable and energy extenders. It also extends unemployment insurance through December 31, 2010 and provides for national disaster and pension funding relief. The new extenders bill also contains a set of revenue offsets on which both House and Senate Democratic leaders appear to ready to finally agree – key to its quick enactment.
The American Jobs and Closing Loopholes Act includes:
• Individual extenders, including: deductions for real property taxes, state and local sales tax, higher education tuition, and teacher’s classroom expenses
• Business extenders, including: refundable AMT credits, research tax credit, differential pay credit, qualified leasehold improvements, qualified restaurant property, retail improvement property, regulated investment companies, and many more
• Charitable extenders covering: IRA contributions to charity, conservation contributions of real property, contributions of food inventory, S Corporations’ charitable contributions, controlling exempt organizations, and more
• Energy extenders, including: alternative motor vehicle credit for heavy hybrids, credits for biodiesel and renewable diesel fuel, and credits for national gas/liquefied petroleum gas used as transportation fuel
• National Disaster Relief
• Infrastructure Incentives, including: enhancements to the Build America Bonds program, and New Markets Tax Credit Program
• International Reforms
• Extended COBRA subsidy
• Change in Taxation of Carried Interest
Upon Passage of the bill by Congress, I will get more information and a full briefing to you!
Check back soon for more tax updates!
Wednesday, May 12, 2010
Tax Alert! New Healthcare Reform Tax Implications
In March 2010, President Barack Obama signed into law the largest piece of health care legislation since Medicare was implemented in the 1960s. With $400 billion of revenue raisers and new taxes, significant tax implications will affect you as early as this year.
Below are some items you can expect from the Patient Protection and Affordable Care Act as amended by the Reconciliation Act over the next four years:
Starting in 2010
• From 2010 through 2013, eligible small business employers (with less than 25 employees and average annual wages of less than $50,000) will receive a 35 percent tax credit on the contribution to their employees' health insurance premiums.
• Last week the IRS mailed postcards to more than four million small businesses with information about this credit, the Small Business Health Care Tax Credit.
• Parents can cover adult children up to age 26 under their tax-qualified employer-provided health plans.
Starting in 2011
• States will receive funding to establish the web-based state insurance exchanges, which will be called Small Business Health Options Programs (SHOP). These exchanges will allow small businesses to form alliances and purchase insurance policies together at reduced rates.
• Small business employers will be eligible to receive federal funding from 2011 to 2015 for providing their employees with wellness programs.
• The definition of qualified medical expenses regarding distributions from Health Savings Accounts (HSAs), Archer Medical Savings Accounts (MSAs) and reimbursements through Health Flexible Spending Arrangements (Health FSAs) and Health Reimbursement Arrangements (HRAs) has been modified to exclude over-the-counter medicines.
• A $2,500 annual cap on expenses will be applied to flexible spending accounts.
• A simplified "cafeteria plan," where employees can choose specific benefits to suit their needs, will be tailored to small businesses starting in 2011. The cafeteria plan will also include those who are self-employed.
Starting in 2013
• Estates and trusts will owe a 3.8 percent unearned income Medicare contribution tax (formerly called Medicare tax) on the lesser of their undistributed net investment income or any adjusted gross income over the highest tax bracket threshold (currently $11,200) . So a trust with AGI of $20,000 would owe $334.40. ($20,000 minus $11,200 equals $8,800, which is then multiplied by .038).
• Limits on tax-subsidized medical expenses will be imposed by raising the itemized medical expense deduction floor from 7.5 percent to 10 percent.
• An additional 0.9 percent tax will be imposed on earned income over $200,000 for individuals and $250,000 for families.
• Individuals with AGI above $200,000 (or families with AGI over $250,000) will pay a 3.8 percent unearned income Medicare contribution tax on the lesser of:
1. Their net investment income* for the tax year or
2. Any excess of their AGI over $200,000 for individuals/$250,000 for families
*Net investment income includes interest, dividend, royalties, rent, income earned from a trade or business, self-employment, estates, trusts and gain from disposing of property. Distributions from retirement plans, pensions and retirement accounts are exempt from the additional tax.
Starting in 2014
• Small business owners with more than 100 employees will be able to purchase employee health insurance through state-run insurance exchanges called SHOP.
• Taxpayers with household income between 100 percent and 400 percent of the Federal Poverty Line (FPL) can qualify for a refundable health insurance premium assistance credit. (The current FPL, which is based on family size, is $10,830 for one person; $3,740 for each additional person and $22,050 for a four-person family).
• Companies with at least 50 employees will have to pay a $2,000 penalty ($166.67 per month) for each employee they don't cover who ends up on a government-subsidized plan.
• Most individuals not eligible for Medicaid or Medicare or other government-sponsored coverage must maintain minimum essential coverage beginning in 2014 or pay a penalty. (Employer-provided insurance will satisfy this coverage requirement).
• From 2014 to 2015, eligible small business employers will receive a 50 percent tax credit on the contribution on plans purchased through SHOP, the state-run insurance exchanges.
• The required estimated tax payments of corporations with assets of at least $1 billion for payments due in July, August and September of 2014 will be increased to 15.75 percentage points.
I will continue to keep you informed as more information is provided to me. Please contact your local legislators regarding this reform if you disagree with it. The most worrisome part of this legislation is the fact that your employer could drop you from your current insurance plan because it is cheaper to pay the penalties for not providing insurance to you!
Thank you for visiting my blog, and contact me with any questions you may have!
TINA
Below are some items you can expect from the Patient Protection and Affordable Care Act as amended by the Reconciliation Act over the next four years:
Starting in 2010
• From 2010 through 2013, eligible small business employers (with less than 25 employees and average annual wages of less than $50,000) will receive a 35 percent tax credit on the contribution to their employees' health insurance premiums.
• Last week the IRS mailed postcards to more than four million small businesses with information about this credit, the Small Business Health Care Tax Credit.
• Parents can cover adult children up to age 26 under their tax-qualified employer-provided health plans.
Starting in 2011
• States will receive funding to establish the web-based state insurance exchanges, which will be called Small Business Health Options Programs (SHOP). These exchanges will allow small businesses to form alliances and purchase insurance policies together at reduced rates.
• Small business employers will be eligible to receive federal funding from 2011 to 2015 for providing their employees with wellness programs.
• The definition of qualified medical expenses regarding distributions from Health Savings Accounts (HSAs), Archer Medical Savings Accounts (MSAs) and reimbursements through Health Flexible Spending Arrangements (Health FSAs) and Health Reimbursement Arrangements (HRAs) has been modified to exclude over-the-counter medicines.
• A $2,500 annual cap on expenses will be applied to flexible spending accounts.
• A simplified "cafeteria plan," where employees can choose specific benefits to suit their needs, will be tailored to small businesses starting in 2011. The cafeteria plan will also include those who are self-employed.
Starting in 2013
• Estates and trusts will owe a 3.8 percent unearned income Medicare contribution tax (formerly called Medicare tax) on the lesser of their undistributed net investment income or any adjusted gross income over the highest tax bracket threshold (currently $11,200) . So a trust with AGI of $20,000 would owe $334.40. ($20,000 minus $11,200 equals $8,800, which is then multiplied by .038).
• Limits on tax-subsidized medical expenses will be imposed by raising the itemized medical expense deduction floor from 7.5 percent to 10 percent.
• An additional 0.9 percent tax will be imposed on earned income over $200,000 for individuals and $250,000 for families.
• Individuals with AGI above $200,000 (or families with AGI over $250,000) will pay a 3.8 percent unearned income Medicare contribution tax on the lesser of:
1. Their net investment income* for the tax year or
2. Any excess of their AGI over $200,000 for individuals/$250,000 for families
*Net investment income includes interest, dividend, royalties, rent, income earned from a trade or business, self-employment, estates, trusts and gain from disposing of property. Distributions from retirement plans, pensions and retirement accounts are exempt from the additional tax.
Starting in 2014
• Small business owners with more than 100 employees will be able to purchase employee health insurance through state-run insurance exchanges called SHOP.
• Taxpayers with household income between 100 percent and 400 percent of the Federal Poverty Line (FPL) can qualify for a refundable health insurance premium assistance credit. (The current FPL, which is based on family size, is $10,830 for one person; $3,740 for each additional person and $22,050 for a four-person family).
• Companies with at least 50 employees will have to pay a $2,000 penalty ($166.67 per month) for each employee they don't cover who ends up on a government-subsidized plan.
• Most individuals not eligible for Medicaid or Medicare or other government-sponsored coverage must maintain minimum essential coverage beginning in 2014 or pay a penalty. (Employer-provided insurance will satisfy this coverage requirement).
• From 2014 to 2015, eligible small business employers will receive a 50 percent tax credit on the contribution on plans purchased through SHOP, the state-run insurance exchanges.
• The required estimated tax payments of corporations with assets of at least $1 billion for payments due in July, August and September of 2014 will be increased to 15.75 percentage points.
I will continue to keep you informed as more information is provided to me. Please contact your local legislators regarding this reform if you disagree with it. The most worrisome part of this legislation is the fact that your employer could drop you from your current insurance plan because it is cheaper to pay the penalties for not providing insurance to you!
Thank you for visiting my blog, and contact me with any questions you may have!
TINA
Wednesday, April 21, 2010
Tax Tip of the Day
Military Service and Combat Zone Compensation
A member of the Armed Forces below the grade of commissioned officer may exclude from gross income compensation for active service received for any month during any part of which he served in a combat zone or was hospitalized at any place as a result of wounds, disease, or injury incurred while serving in a combat zone.
The Tax Pros supports our troops!
A member of the Armed Forces below the grade of commissioned officer may exclude from gross income compensation for active service received for any month during any part of which he served in a combat zone or was hospitalized at any place as a result of wounds, disease, or injury incurred while serving in a combat zone.
The Tax Pros supports our troops!
Monday, April 19, 2010
Welcome!
Welcome to our new Blog! This Blogspot is dedicated to my clients and other followers interested in the latest tax laws, information and updates.
Well, the 2010 tax season is officially closed. Hopefully you have filed your 2009 tax returns. For those of you who have not yet filed, I have sent your 4 month extension to the Internal Revenue Service. The California State tax return extension is AUTOMATIC when the Federal extension is filed. Your next due date is 4 months from the final filing date:
Corporate returns due (extension): July 15, 2010
Individual and Partnership returns due (extension): August 15, 2010
If you require a second extension, please contact me as soon as possible. The 2nd extension must be APPROVED by the Internal Revenue Service prior to the above due dates.
Check back often for the latest tax news and updates!
Thank you for visiting our blog!
Well, the 2010 tax season is officially closed. Hopefully you have filed your 2009 tax returns. For those of you who have not yet filed, I have sent your 4 month extension to the Internal Revenue Service. The California State tax return extension is AUTOMATIC when the Federal extension is filed. Your next due date is 4 months from the final filing date:
Corporate returns due (extension): July 15, 2010
Individual and Partnership returns due (extension): August 15, 2010
If you require a second extension, please contact me as soon as possible. The 2nd extension must be APPROVED by the Internal Revenue Service prior to the above due dates.
Check back often for the latest tax news and updates!
Thank you for visiting our blog!
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