Forbes magazine just published an interesting article about healthcare comparing what we were told it was compared to apparently what it is. Remember "you don't need to read the bill, just pass it and then you can read it."
If you are interested in health reform, I thought you would be interested in this. I thought that the section on "Is it a tax or is it not a tax" was especially interesting.
Click the link below to read the full story:
http://blogs.forbes.com/merrillmatthews/2010/09/22/tough-questions-for-obama-about-obamacare/?partner=alerts
Larry Kopsa CPA
Friday, September 24, 2010
Thursday, September 23, 2010
CAN I STILL TRANSFER MONEY FROM MY IRA TO MY CHARITY WITHOUT TAX?
In the past I have been able to transfer money directly from my IRA to my church. This was a good deal because I did not have enough to itemize deductions. Can I do that again this year?
Howard
Howard this was a good idea for the last couple of years but you will have to wait if you want to be sure that the donation will be tax free.
First a little background. This provision allowed taxpayers that were over 70½ up to $100,000 a year tax free from regular IRAs or Roths. Although this had been a popular tax break, lawmakers allowed it to lapse at the end of 2009 along with other popular easings, such as the sales tax deduction.
We anticipate that the President and Congress will deal with renewing the expiring provisions in the lame-duck session. You will have to wait and see.
Howard
Howard this was a good idea for the last couple of years but you will have to wait if you want to be sure that the donation will be tax free.
First a little background. This provision allowed taxpayers that were over 70½ up to $100,000 a year tax free from regular IRAs or Roths. Although this had been a popular tax break, lawmakers allowed it to lapse at the end of 2009 along with other popular easings, such as the sales tax deduction.
We anticipate that the President and Congress will deal with renewing the expiring provisions in the lame-duck session. You will have to wait and see.
NOTICE FOR PEOPLE THAT HAVE FLEX PLANS OR HEALTH REIMBURSEMENT PLANS
Here is a change that is coming up that you need to be aware of.
If you have cash left in your flex plan or health reimbursement account, consider buying over-the-counter drugs this year. The new health care law provides that for purchases after 2010, flex plans and HRAs can’t reimburse the cost of such medications. Payments are allowed only for prescriptions and insulin.
The same is true for for payouts from health savings accounts and Archer MSAs. There is a limited exception for plans using debit cards. The Internal Revenue will okay over-the-counter drug purchases made with the cards through January 15, 2011 to give debit card issuers a little extra time to reprogram their computer systems.
Don't forget that plans will have to be amended by June 30, 2011 to comply with the rules. The revision must be retroactive to Jan. 1 (or Jan. 15 for plans using debit cards).
If you have cash left in your flex plan or health reimbursement account, consider buying over-the-counter drugs this year. The new health care law provides that for purchases after 2010, flex plans and HRAs can’t reimburse the cost of such medications. Payments are allowed only for prescriptions and insulin.
The same is true for for payouts from health savings accounts and Archer MSAs. There is a limited exception for plans using debit cards. The Internal Revenue will okay over-the-counter drug purchases made with the cards through January 15, 2011 to give debit card issuers a little extra time to reprogram their computer systems.
Don't forget that plans will have to be amended by June 30, 2011 to comply with the rules. The revision must be retroactive to Jan. 1 (or Jan. 15 for plans using debit cards).
HOW THE GOVERNMENT IS IMPACTING SMALL BUSINESS
Every time you turn around it seems that government is slapping regulation and requirements on small business.
Here are some facts from the Small Business Administration (SBA). Small businesses:
•Represent 99.7% of all employer[s]
•Employ just over half of all private-sector employees
•Pay 44% of total U.S. private payroll
•Have generated 64% of net new jobs over the past 15 years
•Create more than half of the nonfarm private gross domestic product (GDP)
•Hire 40% of high-tech workers (such as scientists, engineers and computer programmers)
•Are 52% home-based and 2% franchises
•Made up 97.3% of all identified exporters and produced 30.2% of the known export value in FY 2007.
•Small firms produce 13 times more patents per employee than large patenting firms; these patents are twice as likely as large-firm patents to be among the 1% most cited.
Further, if you look to the Kauffman Foundation, startup firms are the “sole engine” of job creation in the U.S. economy. Kauffman crunched a data set from the Census Bureau covering the years 1977-2005. In all but seven years during that period, existing businesses cut an average 1 million jobs, while firms in existence for a year or less created 3 million
Here is an article from Forbes magazine that summarized the problem.
http://blogs.forbes.com/greatspeculations/2010/09/03/government-declares-war-on-small-business/?partner=alerts
Here are some facts from the Small Business Administration (SBA). Small businesses:
•Represent 99.7% of all employer[s]
•Employ just over half of all private-sector employees
•Pay 44% of total U.S. private payroll
•Have generated 64% of net new jobs over the past 15 years
•Create more than half of the nonfarm private gross domestic product (GDP)
•Hire 40% of high-tech workers (such as scientists, engineers and computer programmers)
•Are 52% home-based and 2% franchises
•Made up 97.3% of all identified exporters and produced 30.2% of the known export value in FY 2007.
•Small firms produce 13 times more patents per employee than large patenting firms; these patents are twice as likely as large-firm patents to be among the 1% most cited.
Further, if you look to the Kauffman Foundation, startup firms are the “sole engine” of job creation in the U.S. economy. Kauffman crunched a data set from the Census Bureau covering the years 1977-2005. In all but seven years during that period, existing businesses cut an average 1 million jobs, while firms in existence for a year or less created 3 million
Here is an article from Forbes magazine that summarized the problem.
http://blogs.forbes.com/greatspeculations/2010/09/03/government-declares-war-on-small-business/?partner=alerts
Wednesday, September 22, 2010
IF YOU ARE A SMALL BUSINESS THAT PAYS EMPLOYEES HEALTH INSURANCE THE IRS HAS A NEW FORM FOR YOU
The Internal Revenue Service has released a draft version of the form that small businesses and tax-exempt organizations will use to calculate the small business health care tax credit when they file income tax returns next year. The IRS also announced how eligible tax-exempt organizations –– which do not generally file income tax returns –– will claim the credit during the 2011 filing season.
The IRS has posted a draft of Form 8941 to this website. Both small businesses and tax-exempt organizations will use the form to calculate the credit. A small business will then include the amount of the credit as part of the general business credit on its income tax return.
Tax-exempt organizations will instead claim the small business health care tax credit on a revised Form 990-T. The Form 990-T is currently used by tax-exempt organizations to report and pay the tax on unrelated business income. Form 990-T will be revised for the 2011 filing season to enable eligible tax-exempt organizations –– even those that owe no tax on unrelated business income –– also to claim the small business health care tax credit.
The final version of Form 8941 and its instructions will be available later this year.
As a refresher
The small business health care tax credit was included in the Affordable Care Act signed by the President in March and is effective this year. The credit is designed to encourage small employers to offer health insurance coverage for the first time or maintain coverage they already have.
In 2010, the credit is generally available to small employers that contribute an amount equivalent to at least half the cost of single coverage towards buying health insurance for their employees. The credit is specifically targeted to help small businesses and tax-exempt organizations that primarily employ moderate- and lower-income workers.
For tax years 2010 to 2013, the maximum credit is 35 percent of premiums paid by eligible small business employers and 25 percent of premiums paid by eligible employers that are tax-exempt organizations. Beginning in 2014, the maximum tax credit will go up to 50 percent of premiums paid by eligible small business employers and 35 percent of premiums paid by eligible, tax-exempt organizations for two years.
The maximum credit goes to smaller employers –– those with 10 or fewer full-time equivalent (FTE) employees –– paying annual average wages of $25,000 or less.
The credit is completely phased out for employers that have 25 FTEs or more or that pay average wages of $50,000 per year or more. Because the eligibility rules are based in part on the number of FTEs, and not simply the number of employees, businesses that use part-time help may qualify even if they employ more than 25 individuals.
The IRS has posted a draft of Form 8941 to this website. Both small businesses and tax-exempt organizations will use the form to calculate the credit. A small business will then include the amount of the credit as part of the general business credit on its income tax return.
Tax-exempt organizations will instead claim the small business health care tax credit on a revised Form 990-T. The Form 990-T is currently used by tax-exempt organizations to report and pay the tax on unrelated business income. Form 990-T will be revised for the 2011 filing season to enable eligible tax-exempt organizations –– even those that owe no tax on unrelated business income –– also to claim the small business health care tax credit.
The final version of Form 8941 and its instructions will be available later this year.
As a refresher
The small business health care tax credit was included in the Affordable Care Act signed by the President in March and is effective this year. The credit is designed to encourage small employers to offer health insurance coverage for the first time or maintain coverage they already have.
In 2010, the credit is generally available to small employers that contribute an amount equivalent to at least half the cost of single coverage towards buying health insurance for their employees. The credit is specifically targeted to help small businesses and tax-exempt organizations that primarily employ moderate- and lower-income workers.
For tax years 2010 to 2013, the maximum credit is 35 percent of premiums paid by eligible small business employers and 25 percent of premiums paid by eligible employers that are tax-exempt organizations. Beginning in 2014, the maximum tax credit will go up to 50 percent of premiums paid by eligible small business employers and 35 percent of premiums paid by eligible, tax-exempt organizations for two years.
The maximum credit goes to smaller employers –– those with 10 or fewer full-time equivalent (FTE) employees –– paying annual average wages of $25,000 or less.
The credit is completely phased out for employers that have 25 FTEs or more or that pay average wages of $50,000 per year or more. Because the eligibility rules are based in part on the number of FTEs, and not simply the number of employees, businesses that use part-time help may qualify even if they employ more than 25 individuals.
Wednesday, September 1, 2010
NEW REQUIREMENTS FOR BUSINESS THAT HAVE CHARGE ACCOUNTS
We want to make sure that you are aware of the new troublesome Federal Trade Commission rules that become law on January 1, 2011. The rules are meant to help detour identity theft. These rules are referred to as the “Red Flag Rules” and impact every company that bills customers. This is not specifically for credit cards but rather for billings that you send out.
If you are not in compliance, quite possibly you could be subject to a fine of $2,500 per occurrence plus a $3,500 civil penalty.
If you are not yet aware of this new requirement and would like more information you can find more information on the Kopsa Otte website at
http://www.kopsaotte.com/tax/documents/RedFlagMemo.pdf
It is a pleasure serving you.
If you are not in compliance, quite possibly you could be subject to a fine of $2,500 per occurrence plus a $3,500 civil penalty.
If you are not yet aware of this new requirement and would like more information you can find more information on the Kopsa Otte website at
http://www.kopsaotte.com/tax/documents/RedFlagMemo.pdf
It is a pleasure serving you.
CONGRESS CONSIDERS HAVING ALL EMPLOYERS PROVIDE IRA'S TO THEIR EMPLOYEES
Here we go again. A possible new burden on already challenged businesses. Note that this has not passed but it is being discussed. In reading the proposed legislation it is a phase in deal so that in the first few years the cost is not extreme. The problem is we all have seen these programs expand.
Democratic lawmakers in the House and Senate have introduced the Automatic IRA Act of 2010 to set up automatic individual retirement accounts for all workers in order to encourage some $15 billion in additional savings a year. Half of all American workers have no retirement savings at all.
I will keep an eye on this for you.
Larry Kopsa CPA
Democratic lawmakers in the House and Senate have introduced the Automatic IRA Act of 2010 to set up automatic individual retirement accounts for all workers in order to encourage some $15 billion in additional savings a year. Half of all American workers have no retirement savings at all.
I will keep an eye on this for you.
Larry Kopsa CPA
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