Posted by Wally Ross on Wed, Jul 07, 2010
Along with the health care changes that we discussed in our previous blog post, President Obama's new laws bring change to our old friend: the W-2. Starting with the 2011 tax year (the W-2 you will received in 2012), employers will be required to report the value of health insurance premiums provided for each employee.
This announcement caused a tremendous uproar because there have been many reports indicating that these insurance amounts would be taxable. However, rest assured that these reports are incorrect. Though the value of health coverage provided by employers must now be listed separately on the W-2, it will not be added to taxable wages. Our current law states that health insurance is not taxable and the new health care laws do not change this.
The reason behind this change is simply that Congress wants to tell employees how much is being spent on their health benefits each year.
Posted by Ross Tax & Accounting on Fri, May 21, 2010
A massive reform on our country's health care system has taken place with the passage of two bills. The first, the "Patient Protection and Affordable Care Act," was signed by President Obama on March 21, 2010. The companion bill, the "Health Care and Education Reconciliation Act of 2010," was signed into law on March 30, 2010 and made several changes to the "Patient Protection Act." Together, these two pieces of legislation will have a dramatic affect on taxes paid by businesses and individuals and, of course, on the health care industry.
Provisions in these laws will go into effect over the next several years, creating an estimated $438 billion in new taxes on employers and individuals. For the first time, employers will be subjected to taxes if they do not offer coverage to employees or if the coverage fails an affordability test.
To help you keep up with the latest developments, below are key tax provisions of the health care reform laws:
- 10% tax will be imposed on indoor tanning services starting July 1, 2010.
- Beginning in 2018, insurance companies will be assessed a 40% excise tax on health insurance plans with annual premiums exceeding $10,200 for individuals and $27,500 for families.
- Starting in 2014, employers with at least 50 employees would be assessed an annual penalty of $2,000 for each employee that they did not provide coverage to.
- Starting in 2011, the penalty for using health savings account funds (FSA) for nonqualified expenses will increase from 10% to 20% and over-the-counter medications cannot be purchased with FSA funds. Staring in 2013, contributions to FSA's for medical expenses will be limited to $2,500.
- If make more than $200,000 a year, starting in 2013 the 2.35% of your payroll wages will go to Medicare tax (currently it's 1.45% of wages)
Ross Tax & Accounting Co. will continue to keep you posted any provisions that will affect your personal or business tax situations. If you have any questions or opinions, please comment below - we'd love to hear how you feel about the health care reforms.
Posted by Wally Ross on Fri, Jan 08, 2010
While many of us were wrapping Christmas gifts or planning holiday 
gatherings this past Christmas Eve, the Senate passed an $871 billion health care reform bill by a vote of 60 to 39. The "
Patient Protection and Affordable Care Act of 2009" would expand health insurance coverage to 94% of Americans and pay for it with billions of dollars in new taxes and fees.
The House passed its version of health reform back in early November. Its bill, the "Affordable Health Care for America Act," also extends coverage and pays for it with a different collection of taxes and fees from those in the Senate bill.
Both bills are massive and contain provisions that would affect individuals, businesses, and the medical and insurance industries. A conference of members from the House and Senate will be held in January to work out the differences between the two bills and fashion one piece of legislation. When that bill comes out of conference, it must be passed by the House of Representatives and the Senate before it can be sent to the President to be signed into law.
Among the tax provisions in the Senate bill:
* A 40% excise tax on employer-provided health insurance plans with annual premiums over $8,500 for individuals and $23,000 for families. Somewhat higher limit for retirees and those in high-risk professions.
* A penalty excise tax for individuals who fail to maintain health insurance coverage, starting at $95 in 2014 and increasing to $750 by 2016.
Among the tax provisions in the House bill:
* A 5.4% surtax on single taxpayers with incomes over $500,000 and joint filers with incomes over $1 million.
* An additional tax levied on those who fail to obtain health insurance coverage of either 2.5% of their adjusted income or the average cost of insurance premiums available on the new health care exchange. Exemptions provided for lower-income individuals.
Both the Senate and the House bills provide individuals and businesses with tax credits to help with the costs of insurance. It's important to note that the provisions in the final bill may differ significantly from those in either of the current bills, so as you begin your tax planning for 2010, remember that health reform and the taxes connected with it are still a work in progress, not a final law.