• Our office will be closed Monday, May 31st in observance of Memorial Day.

• We're moving!  Pending construction finalization, we will be relocating to a new office (pictured below) on June 10th.  It is located down the street from our current location in Carmel Crossing (close to the intersection of HWY 51 & Carmel Road).  We will send out further correspondence when the details of the move are final.  Stay posted!

New Health Care Law Includes Tax Provisions

The new health care legislation includes several changes for both individuals and businesses.  The two laws, the Health Care & Education Reconciliation Act of 2010 and the Patient Protection and Affordable Care Act of 2010, encourage universal health insurance coverage through options such as employer plans, private plans, and state-operated exchanges.  The following are important tax-related provisions included in these new laws:

Insurance Coverage: 

• Small Businesses - Starting this year, a business with average annual wages of less than $50,000 per employee and with fewer than 25 employees may use a tax credit to partially offset the cost of employer-provided health insurance.  The full credit is available to businesses with average annual wages of $25,000 per employee and ten or fewer employees. 
• Individual Coverage - Starting in 2014, an individual who does not obtain at least "minimum essential coverage" may be assessed a nondeductible tax penalty.  The monthly penalty is calculated using a percentage of the person's income or a flat dollar amount.
• Employer Coverage - Starting in 2014, an employer with at least 50 full-time employees may be assessed a nondeductible tax penalty if it does not offer minimum essential coverage.

Other Tax Changes:

• Medicare Tax - Currently the 1.45% Medicare tax applies to earned income like wages.  Starting in 2013, two additional Medicare taxes may be imposed on high-income taxpayers:
  • 0.9% Medicare surtax for joint filers on earned income above $250,000 ($200,000 for single filers)
  • 3.8% Medicare tax on "net investment income" for joint filers with a modified adjusted gross income above $250,000 ($200,000 for single filers).  Net investment income includes "unearned income" such as interest, dividends, royalties, rents, gains from dispositions of property not used in an active trade or business, and passive activity income (but not distributions from qualified retirement plans and IRA's). 
• Adoption Credit - The adoption credit is increased to $13,170 for 2010 (from $12,170) and extended through 2011.  The credit is also made refundable.
• Information Reporting - In 2011, employers must report the value of health insurance coverage on each employee's W-2 form.  Effective for 2012, a business must file information returns for annual payments totaling $600 or more to every corporate recipient.
• Medical Deductions -Currently, you can deduct unreimbursed medical expenses in excess of 7.5% if adjusted gross income (AGI).  Starting in 2013, the floor will be raised to 10%.  Exception: prior to 2017, individuals who are 65 or older are exempt from this increase.
• Flexible Spending Accounts (FSAs) - Beginning in 2013, the maximum amount that may be contributed to a health care FSA will be limited to $2,500.

The health care reform legislation will affect every taxpayer and every business.  For further information, or for clarification on how these new laws affect your situation, please contact us.

HIRE Act Certification Form Now Available

In last month's Wally's World, we told you about the HIRE Act which, when passed in March, provided tax incentives for companies that hired unemployed works.  One of these incentives is an exemption from social security payroll taxes for every qualified worker hired after February 3, 2010 (and before January 1, 2011).

In order for employers to document this payroll tax exemption, there is a new IRS form available.  Form W-11(Hiring Incentives to Restore Employment Act Employee Affidavit) is to be filled out by the new hire, certifying under penalties of perjury that he or she was either unemployed or worked fewer than a total of 40 hours during the 60 days prior to taking the job.  The W-11 forms are not to be filed with the IRS - the employer should retain them along with other payroll records.

As always, if you have any questions do not hesitate to contact us.

Just For Laughs:

This newsletter provides business, financial, and tax information to clients and friends of our firm. This general information should not be acted upon without first determining its application to your specific situation. For further details on any article, please contact us.