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, Mar 19, 2010
Individuals who can not obtain a social security number or who are non-residents of the United States and are liable to pay taxes here, are issued an Individual Taxpayer Identification Number (ITIN) by the IRS.
Effective January 1, 2010, the North Carolina Department of Revenue requires that 4% of pay be withheld for ITIN contractors who receive more than $1,500 per year. According to the NCDOR "payers should file and pay withholding taxes on contractors with ITIN's just like they would for regular employees."
If this new law effects you, and you do not already pay withholding taxes, you must register with North Carolina. After you register you will receive a withholding account number and then can begin filing and paying the taxes.
If you have questions, or if we can be of any assistance, please contact us.
Posted by Wally Ross on Fri, Feb 12, 2010
As of January 2010, everyone is eligible to convert a traditional account into a Roth IRA, regardless of income. The taxpayers who were originally shut out by the $100,000 income limit can now take advantage of redeeming their retirement money tax-free.
Roth IRA's are often more popular than Traditional IRA's due to the fact that you pay tax on money before you contribute it, thus avoiding being taxed at distribution (when the tax rates will most certainly be higher). However, if you forsee yourself being in a lower tax bracket at retirement age or expect to withdraw the money in less than 5 years, converting to a Roth IRA may not be beneficial for you. Be sure to consider all factors before deciding if a conversion is best.
Calculate the benefits (if any) of converting to a Roth IRA with our "Roth vs Traditional IRA" calculator.
*Dont forget that it is still not too late to contribue to an IRA for the 2009 tax year. Click here, or call us, for help preparing your 2009 personal tax return.
Posted by Wally Ross, CPA on Fri, Feb 05, 2010
The tragedy in Haiti left many people wanting to help in any capacity possible. Congress even called upon all Americans to contribute what they could by passing a new tax incentive. On January 22, President Obama signed a law to give taxpayers an early deduction for contributions made towards earthquake relief in Haiti. The contribution must be made after January 11, 2010, and before March 1, 2010.
If you make a monetary contribution through your cell phone via a text message, you may use your telephone bill to substantiate your contribution. The telephone bill must show the name of the charitable organization, the date of the contribution, and the amount of the contribution. Otherwise, as normally done, keep record of the receipt you receive for your donation.
Please note that if you claim a Haiti relief deduction on your 2009 return, you may not claim it on your 2010 return. You should compare the tax benefit of a 2009 deduction or a 2010 deduction. For 2009, higher-income taxpayers have a limit on their total itemized deductions. This limit is eliminated for 2010, so the deduction may actually provide a bigger tax break if taken on your 2010 tax return.
If you need additional information or filing assistance, please contact our office. Our hearts & prayers go out to the victims of the earthquake and their families.