In March 2010, President Obama signed the Patient Protection and Affordable Care Act, and Health Care and Education Reconciliation Act of 2010, known together as the 2010 Health Care Reform Legislation.  This legislation will affect businesses, individuals, insurers and even the CPAs here at Archer Group.  Here are just a few of the key points from the legislation. 

Impact on All Employers

• Effective 2011 - Employers must report the value of health insurance plans on W-2s
• Effective 2011- All employer-sponsored plans will require amendments to plans including: Eliminate lifetime and annual limits on benefits, provide first-dollar coverage for preventative care, extend eligibility for dependent coverage (if offered) to employees' unmarried children who are not yet 27 years old
• Effective 2013 - $2,500 limitation on contributions to health FSAs.  No longer use FSAs, HSAs or MSAs for over-the-counter drugs.  Penalties for using these accounts for items that are not allowed, increased from 10 to 20% for HSAs and from 15 to 20% for MSAs.
• Effective 2014 (for employers who offer coverage) - No waiting period longer than 90 days to obtain coverage
• Effective 2014 (for employers who offer coverage) - Employers must offer a voucher to employees with an income less than 4X the federal poverty level whose share of the premium is greater than 8% but less than 9.8% of their income and who chooses to enroll in a state exchange rather than participating in the employer's group health insurance plan.  This voucher must be in an amount equal to what the employer would have paid in premiums for that employee, and can be applied by the employee toward their premiums in the exchange plan

Impact on Small to Midsize Employers

• Effective 2010-2013 (Employer size 25 or less) - Employers providing health care coverage for employees are eligible to claim a credit equal to 35% of nonelective contributions the businesses make on behalf of their employees for insurance premiums.  The employer must pay at least 50% of the premium cost and must pay a uniform percentage for all covered employees.  The premium amount taken into account is capped at amount of the average premium for the small group market in the state (or an area within the state) in which the employer offers coverage
• Effective 2014 onward (Employer size 25 or less) - Tax credit percentages described above will increase to 50%.  Employers with 10 or fewer employees and average wages of less than $25,000 will receive 100% of the credit
• Effective 2014 - All states must establish an exchange to facilitate the purchase of qualified health plans and establish a Small Business Health Options Program (SHOP) that will assist employers with less than 100 employees in obtaining group coverage.  A Consumer Operated and Oriented Plan (CO-OP) program will be created to facilitate the creation of non-profit, member-run health insurance companies.

Impact on Larger Employers

• Effective 2014 (Employer size >50) - Employers that do not offer coverage for all full-time employees, or offer inadequate coverage, are required to pay a penalty if any full-time employee is certified to the employer as having purchased health insurance through a state exchange with respect to which a tax credit or cost-sharing reduction is allowed or paid to the employee.  The number of employees is based on average employee count from the prior calendar year.
• Effective date not yet determined (Employer size >200) - Employers must automatically enroll employees into health insurance plans offered by the employer.  Employers must provide employees with notice of automatic enrollment and give the employees the ability to opt out of coverage.
• Effective 2017 (Employer size >100) - Employees will be able to join state exchanges, at the state's discretion.

Impact on Individuals

• Effective 9/23/10 - Insurers cannot impose lifetime limits on insurance coverage or cancel policies due to serious illness
• Effective 9/23/10 - Pre-existing condition exclusions for children are prohibited
• Effective 9/23/10 - Group health plans and health insurers that provide dependent care coverage must continue to make such coverage available for an adult child until age 26 (effective for plan years beginning after Sept. 23, 2010).  Reimbursements for medical care under an employer-provided accident or health plan are excluded from gross income for any employee's child who has not yet turned 27 by the end of the tax year (effective March 30, 2010).  IRS will apply the same rule to coverage under an employer-provided accident or health plan.
• Effective 2010-2014 - A temporary national high-risk pool will be created to permit adults with pre-existing conditions to obtain subsidized coverage.  The pool will be dissolved after 2014, when all insurers will be prohibited from excluding persons with pre-existing conditions.
• Effective 2013 (Medicare changes) - Medicare taxes increase to 2.35% on earnings over $250,000 for joint returns, $125,000 for married filing separate, or $200,000 for other individuals.  A 3.8% Medicare tax will be imposed on the lesser of net investment income or AGI over $250,000 for joint returns, $125,000 for married filing separate, or $200,000 for other individuals.
• Effective 2013 - The itemized deduction threshold for unreimbursed medical expenses is increasing to 10% of AGI (however it remains 7.5% for individuals age 65+ through 2016).
• Effective 2014 - All individuals must carry insurance or pay penalties - the greater of $95 or 1% of income over the filing threshold in 2014; $325 or 2% in 2015; and $695 or 2.5% in 2016 and beyond.  Penalty also due for each dependent who does not have coverage (fee is 1/2 adult amount for those under 18).  Certain hardship exceptions do apply. 

This information was all supplied by the AICPA through the WSCPA.  For more information on Health Care Reform please visit http://www.healthcare.gov/ for more detailed information.  There are areas for you to leave your comments as well.

Two new tax benefits are now available to employers hiring workers who were previously unemployed or only working part-time. These are part of the Hiring Incentives to Restore Employment (HIRE) Act which was recently enacted.

 Employers who hire unemployed workers after February 3, 2010 and before january 1, 2011 might qualify for a 6.2% payroll tax incentive; in effect exempting them from their share of Social Security taxes on wages paid to these workers after March 18, 2010. This reduced tax withholding will have no effect on the employee's future Social Security benefits and employers would still need to withhold the employee's 6.2% share of Social Security taxes as well as income taxes. The employer and employee's share of Medicare taxes would also still apply to these wages.

In addition, for each worker retained for at least a year, businesses may claim an additional general business tax credit up to $1,000 per worker when they file their 2011 income tax returns.

The two tax benefits are especially helpful to employers who are adding positions. New hires filling existing positions also qualify but only if the workers they are replacing left voluntarily or for cause. Family members and other relatives do not qualify.

The new law requires that the employer get a statement from each eligible new hire certifying that he or she was unemployed during the sixty days before beginning work or that they have worked fewer than a total of 40 hours for someone else during the 60 day period. The IRS is currently developing a form employees can use to make the required statement.

Businesses, agricultural employers, tax-exempt organizations and public colleges and universities all qualify to claim the payroll tax benefit for eligible newly-hired employees. Household employers cannot claim this new tax benefit.

 

Congratulations Bernadette Halliday, on her partnership with Archer Group, PS!

We are currently in the process of developing our new sign signifying the new name: Archer Halliday, PS

Stay tuned for more information and a celebration party!

This useful information is being passed on from The Bank of the Pacific

Warning: 2010 Census cautions from the Better Business Bureau; be cautious about giving information to Census workers

With the US Census process beginning, the Better Business Bureay (BBB) advises people to be cooperative but cautious so as not to become a victim of fraud or identity theft. The first phase of the 2010 US Census is under way as workers have begun verifying the addresses of households across the country.

Eventually more than 140,000 US Census workers will count every person in the United States and gather information about every person living at each address including name, age, gender, race and other relevant data.

The big question is: How do you tell the difference between a US Census worker and an con artis? BBB offers the following advice:

If a US Census worker knocks on your door, they will have a badge, a handheld device, a Census Bureau canvas bag and a confidentiality notice. ASK TO SEE THEIR IDENTIFICATION AND THEIR BADGE BEFORE ANSWERING THEIR QUESTIONS; however, you should never invite anyone you don't know into your home.

At this time, Census workers are only knocking on doors to verify address information.

DO NOT GIVE YOUR SOCIAL SECURITY NUMBER, CREDIT CARD OR BANKING INFORMATION TO ANYONE, EVEN IF THEY CLAIM THEY NEED IT FOR THE US CENSUS.

REMEMBER: No matter what they ask, you really only need to tell them how many people live at your address.

While the Census Bureau may ask for basic financial information such as salary range, you do not have to answer anything at all about your financial situation. THE CENSUS BUREAU WILL NOT ASK FOR YOUR SOCIAL SECURITY NUMBER, BANK ACCOUNT OR CREDIT CARD NUMBERS; NOR WILL EMPLOYEES SOLICIT DONATIONS. Anyone asking for that kind of information is NOT with the Census Bureau.

The Census Bureau has decided not to work with Acorn on gathering this information. No Acorn worker should approach you saying he/she is with the Census Bureau.

Eventually Census workers may contact you by telephone, mail or in person at home; however, the Census Bureau will not contact you by email, so be on the lookout for email scams impersonating the Census.

Never click on a link or open any attachments in an email that are supposedly from the US Census Bureau.

For more information on avoiding identity theft and fraud, visit www.bbb.org

Welcome to 2010! A new year means new beginnings and the start of tax season. Tax organizers will be mailed to our current clients in a few days. Please fill them out and get your information in to us as soon as possible. Remember: the sooner you bring in your information, the sooner your return will be processed!

If you are not yet a client, please contact us and inquire about receiving your tax planner.

The Worker, Homeownership and Business Assistance Act of 2009 has extended the tax credit of up to $8,000 for qualified first-time home buyers purchasing a principal residence. The tax credit now applies to sales occurring on or after January 1, 2009 and on or before April 30, 2010. However, in cases where a binding sales contract is signed by April 30, 2010, a home purchase completed by June 30, 2010 will qualify.

FOR SALES OCCURRING AFTER NOVEMBER 6, 2009, THE ACT ESTABLISHES INCOME LIMITS OF $125,000 FOR SINGLE TAXPAYERS AND $225,000 FOR MARRIED COUPLES FILING JOINT RETURNS.

The income limits for sales occurring after January 1, 2009 and on or before November 6, 2009 remain at $75,000 for single taxpayers and $150,000 for married taxpayer filing joint returns.

Who is Eligible?

The $8,000 tax credit is available for first-time home buyers only. The law defines 'first-time home buyer' as a buyer who has not owned a principal residence during the three-year period prior to the purchase. All US citizens who file taxes are eligible to participate in the program.

Payback Provisions:

The tax credit is a true credit. IT DOES NOT HAVE TO BE REPAID. The only repayment requirement is if the homeowner sold the home within three years after the purchase.

Income Limits:

Home buyers who file as single or head-of-household taxpayers can claim the full $8,000 credit if their modified adjusted gross income (MAGI) is less than $75,000. For married couples filing a joint return, the income limit doubles to $150,000. Single or head-of-household taxpayers who earn between $75,000 and $95,000 are eligible to receive a partial first-time home buyer tax credit. Married couples who earn between $150,000 and $170,000 are eligible to receive a partial first-time home buyer tax credit. The credit is not available for singe taxpayers whose MAGI is greater than $95,000 and married couples with a MAGI that exceeds $17,000.

Effective Dates for the Tax Credit:

First-time home buyers would receive an $8,000 tax credit for the purchase of any home on or after January 1, 2009 and before December 1, 2009. To qualify, you must actually close on the sale of the home during this period.

Tax Credit is Refundable:

A refundable credit means that if you pay less than $8,000 in federal income taxes, then the government will write you a check for the difference. For example, if you owe $5,000 in federal income taxes, you would pay nothing to the IRS and receive a $3,000 payment from the government. If you are due to receive a $1,000 tax refund from the government, your refund would grow to $9,000 ($1,000 plus $8,000 from the home buyer tax credit). Buyers can take the tax credit on their 2008 or 2009 income tax return.

Types of HOmes that Qualify for the Tax Credit:

All homes, whether single-family, townhomes or condominiums apartments will qualify, provided that the home will be used as a principal residence adn the buyer has not owned a principal residence in the prior three years. This also includes newly-constructed homes.

For more details on the tax credit, visit www.federalhousingtaxcredit.com