74th WEALTHIEST PERSON DIES-PASSES FORTUNE TO CHILDREN & GRANDCHILDREN TAX-FREE

I thought you might like to see this, if you haven't already.

Texas billionaire's legacy: Death, but no taxes

IF GOD HAD TEXTED THE TEN COMMANDMENTS TO MOSES:

The following blurb was in the June issue of Readers Digest. See if you can decipher the message. I needed the help of my 13 year old son to figure it out.

M, pls rite on tbs & giv 2 ppl

1. no1 b4 me. srsly.
2. dnt wrshp pix/idols
3. no omg's
4. no wrk on w/end (sat 4 now; sun l8r)
5. pos ok - ur m&d r cool
6. dnt kill ppl
7. :-X only w/ m8
8. dnt steal
9. dnt lie re: bf
10. dnt ogle ur bf's m8. or ox. or dnkey. myob.

QUESTION ON HEALTH INSURANCE AND W-2 TAX FORMS

Larry, I contacted my Congressman about House Bill 3590, the Health Care bill and asked for a summary of changes. The Aid directed me to go to http://www.thomas.gov/, enter "HR 3590" in the search box and look for "CRS Summaries."

Starting in 2011—next year—the W-2 tax form sent by your employer will be increased to show the value of whatever health insurance you are provided.

It doesn't matter if you're retired; your gross income WILL go up by the amount of insurance your employer paid for. So you’ll be required to pay taxes on a larger sum of money than you actually received; take the tax form you just finished and see what $15,000.00 or $20,000.00 additional gross income does to your tax debt. That's what you'll pay next year. For many it puts you into a much higher bracket. This is how the government is going to buy insurance for fifteen (15) percent that don't have insurance and it's only part of the tax increases, but it's not really a "tax increase" as such, it is a redefinition of your taxable income.

Not believing this I researched the CRS Summary and here's what found:

Title IX Revenue Provisions—Subtitle A: Revenue Offset
"(Sec. 9002) Requires employers to include in the W-2 form of each employee the aggregate cost of applicable employer-sponsored group health coverage that is executable from the employee's gross income (excluding the value of contributions to flexible spending arrangements)."

Joan Pryde is the Senior Tax Editor for the Kiplinger Letters. Go to Kiplinger's and read about the thirteen (13) tax changes for 2010 that could affect you.

Why am I sending you this? The same reason I hope you forward this to every single person in your address book. People have the right to know the truth because an election is coming in November. So vote intelligently, based on your values. But also adjust your tax withholding, or increase your savings, so that you aren't surprised and put in a jam when your federal income taxes are due on April 15, 2012.

Larry, Do you agree with this assessment?

James

James, Incorrect. Including the health insurance on the W-2 is correct but this is just for informational purposes only. You do not have to gross up into income… YET.

Larry Kopsa CPA

QUOTE OF THE WEEK

"Nobody who ever gave his best regretted it."
--George Halas
Former Chicago Bears Coach

NOTE ON S CORPORATIONS - I MAY HAVE JUMPED THE GUN

Last week I had an entry about changes in Social Security and Medicare tax for professional S Corporations. When I published this entry it looked almost certain that the Senate was going to go along with the bill that had passed the House. The provision was part of a bill that was going to extend unemployment benefits. Everyone said it was a slam dunk.

Oops. As I write this the bill has not gotten through the Senate and there are attempts to strip the S corporation provisions out of the bill. See the following Update on S Corporations:

The American Jobs and Closing Tax Loopholes Act of 2010 did not get enough votes to proceed in the Senate on Wednesday, leading Senate Finance Committee Chairman Max Baucus, D-Mont., to modify several provisions within the bill, including one that would raise taxes for certain S corporations.

Sorry... I will keep you posted.

Larry Kopsa CPA

FOOD STAMPS TOP 40 MILLION

According to Bloomberg News, "For the first time, the number of Americans receiving food stamps topped 40 million in March. That number represents a 21 percent increase from the year before."

MOONING A FELLOW EMPLOYEE IS NOT GROSS MISCONDUCT

As you know, large employers with 20 or more employees with health insurance are required to provide health insurance to fired or terminated employees as long as the employee is not released for “gross misconduct.” The question is, what do the courts consider “gross misconduct?” It might surprise you.

In the first case, a fraud conviction is grounds for denying COBRA health care coverage. A professor was fired after the school learned that he had just plead guilty to student loan, bank and Social Security fraud. The school also discovered he had fabricated his credentials and never actually earned a bachelor’s degree. That is gross misconduct, a court says (Moore v. Williams College, D.C., Mass.).

But, according to another court, “mooning” a fellow worker is not gross misconduct. In this case, a female nurse who was fired for exposing her derriere during a dispute with a male coworker. Although this violated workplace protocol, her isolated and impulsive act wasn’t a case of gross misconduct (Stormont-Vail Health Care v. Reavis, D.C., Kan.). According to the court, she can be fired but she cannot be denied COBRA coverage and also is eligible for a 65% subsidy from the federal government of her health care premiums for up to 15 months.