Dear friends of RC Jones & Associates
The new health care law includes sweeping changes for both employers and individuals. Following is a brief summary of several key tax-related provisions.
Coverage for individuals: After 2013, any individual not eligible for Medicare or Medicaid must obtain minimum essential coverage or pay a nondeductible penalty based on a flat dollar amount or a percentage of household income. The new law also provides coverage subsidies to qualified lower-income individuals through premium assistance tax credits and reduced cost-sharing.
Employer requirements: Beginning in 2014, an employer failing to offer minimum essential coverage in any month for an eligible full-time employee will be liable for an additional tax. The tax equals 1/12th of $2,000 times the number of all full-time employees. This penalty applies to employers with 50 or more workers, but the first 30 workers are subtracted from the calculation.
Small businesses: Beginning in 2010, a qualified small business may use a special tax credit to offset employer-provided coverage. A "small business" is generally one with no more than 25 employees and average annual wages of less than $50,000 per employee. A bigger credit is available to employers with no more than 10 employees and average annual wages of less than $25,000.
Medicare taxes: Beginning in 2013, an additional 0.9% Medicare tax is imposed on wages of unmarried individuals with earned income above $200,000 and $250,000 for married joint filers; and an additional 3.8% Medicare tax applies to "net investment income" received by unmarried individuals with a modified adjusted gross income (MAGI) above $200,000 and $250,000 for joint filers.
Tax on health insurance plans: Beginning in 2118, insurers will have to pay a 40% excise tax if the annual premiums for a health insurance plan exceed $10,200 for individual coverage and $27,500 for family coverage.
Medical deductions: Under current law, an individual may deduct only qualified medical expenses in excess of 7.5% of adjusted gross income (AGI). Beginning in 2013, the new law generally raises this "floor" to 10% of your AGI.
However, an individual (and spouse) who is age 65 or older is temporarily exempt from this increase for tax years beginning after 2012 and before 2017.
Flexible spending accounts: The new law caps the annual amount of health care FSA contributions at $2,500, beginning in 2013 (indexed for inflation after 2013).
Adoption credit: The new law makes the adoption credit refundable, retroactively raises the dollar limit on the credit for 2010 from $12,170 to $13,170 and enhances the credit for adopting special needs children.
Information reporting: Beginning in 2012, a business must file information returns for annual payments of $600 or more to any corporate or noncorporate recipient (other than tax-exempt entities).
Of course, this is only a general overview of several important tax provisions in the massive health care legislation. The new health care law will have far-reaching effects for individuals and business owners. Contact us at (816) 792-9966 for an analysis of your situation.
Very truly yours,
Robert C. Jones
www.rcjonesinc.com
Monday, April 26, 2010
PAYROLL TAX BREAKS IN ‘HIRE ACT’
Dear friends of RC Jones & Associates
The new Hiring Incentives to Restore Employment Act (HIRE) Act of 2010 provides two key payroll tax breaks for employers who hire new employees.
Payroll tax break #1: Normally, an employer must pay the 6.2% Social Security tax portion of the FICA tax on an employee's wages up to a specified annual amount ($106,800 for 2010). The 1.45% Medicare tax portion of the FICA tax applies to all wages.
But the new law waives the Social Security tax liability for wages paid to qualified employees from March 19, 2010, through Dec. 31, 2010. A "qualified employee" is one who starts work for the company after Feb. 3, 2010, and before Jan. 1, 2011; has not been employed for more than 40 hours during the previous 60 days; was not hired just to replace another employee (unless the former employee separated from employment voluntarily or for cause); is not related to the employer; and does not own, either directly or indirectly, more than 50% of the employer.
Payroll tax break #2: In addition to the payroll tax exemption for hiring qualified employees, an employer can secure a tax credit for keeping these workers employed for at least 52 consecutive weeks. Each credit, which is added to the general business credit, equals the lesser of $1,000 or 6.2% of the wages paid to the worker during the 52-week period.
Of course, this is only a brief overview of these two new tax breaks. If you need more details about the HIRE Act rules, please do not hesitate to call our office at (816) 792-9966. One of our experienced staff members will be glad to assist you.
Very truly yours,
Robert C. Jones
www.rcjonesinc.com
The new Hiring Incentives to Restore Employment Act (HIRE) Act of 2010 provides two key payroll tax breaks for employers who hire new employees.
Payroll tax break #1: Normally, an employer must pay the 6.2% Social Security tax portion of the FICA tax on an employee's wages up to a specified annual amount ($106,800 for 2010). The 1.45% Medicare tax portion of the FICA tax applies to all wages.
But the new law waives the Social Security tax liability for wages paid to qualified employees from March 19, 2010, through Dec. 31, 2010. A "qualified employee" is one who starts work for the company after Feb. 3, 2010, and before Jan. 1, 2011; has not been employed for more than 40 hours during the previous 60 days; was not hired just to replace another employee (unless the former employee separated from employment voluntarily or for cause); is not related to the employer; and does not own, either directly or indirectly, more than 50% of the employer.
Payroll tax break #2: In addition to the payroll tax exemption for hiring qualified employees, an employer can secure a tax credit for keeping these workers employed for at least 52 consecutive weeks. Each credit, which is added to the general business credit, equals the lesser of $1,000 or 6.2% of the wages paid to the worker during the 52-week period.
Of course, this is only a brief overview of these two new tax breaks. If you need more details about the HIRE Act rules, please do not hesitate to call our office at (816) 792-9966. One of our experienced staff members will be glad to assist you.
Very truly yours,
Robert C. Jones
www.rcjonesinc.com
Monday, April 5, 2010
IDENTIFICATION OF STOCK SALES
Friends of RC Jones & Associates
The stock market continues to have its ups and downs. Therefore, it’s not unusual for an investor to own shares of the same stock purchased at different times and different prices. How are tax gains or losses calculated when just a few shares of hte stock are sold?
When in doubt, the IRS assumes the first shares bought are the first ones sold. This is called the first-in, first-out (FIFO) method. However, you don't have to blindly follow the IRS approach. Instead of using FIFO, an investor can specifically identify shares of securities that you are intending to sell. This can produce a better tax result for a particular situation. In fact, by specifically identifying the shares being sold, you may be able to turn a taxable gain into a beneficial tax loss.
How do you identify the shares that you’re selling? At the time of the sale, the investor must specify to the broker or other agent the specific stock to be sold. The stock being sold is identified by the purchase date, the purchase price or both. Make sure that a written confirmation is received.
If you're an online trader who does not use a broker, you must maintain detailed records of the shares being sold.
Remember that stock identification must be made at the time of the sale. Although don't offer investment advice, if you are contemplating a sale, we can help to provide the necessary assistance from a tax planning perspective. Do not hesitate to contact our office at (816) 792-9966 to schedule a consultation with one of our experienced staff members.
Very truly yours,
Robert C. Jones
www.rcjonesinc.com
The stock market continues to have its ups and downs. Therefore, it’s not unusual for an investor to own shares of the same stock purchased at different times and different prices. How are tax gains or losses calculated when just a few shares of hte stock are sold?
When in doubt, the IRS assumes the first shares bought are the first ones sold. This is called the first-in, first-out (FIFO) method. However, you don't have to blindly follow the IRS approach. Instead of using FIFO, an investor can specifically identify shares of securities that you are intending to sell. This can produce a better tax result for a particular situation. In fact, by specifically identifying the shares being sold, you may be able to turn a taxable gain into a beneficial tax loss.
How do you identify the shares that you’re selling? At the time of the sale, the investor must specify to the broker or other agent the specific stock to be sold. The stock being sold is identified by the purchase date, the purchase price or both. Make sure that a written confirmation is received.
If you're an online trader who does not use a broker, you must maintain detailed records of the shares being sold.
Remember that stock identification must be made at the time of the sale. Although don't offer investment advice, if you are contemplating a sale, we can help to provide the necessary assistance from a tax planning perspective. Do not hesitate to contact our office at (816) 792-9966 to schedule a consultation with one of our experienced staff members.
Very truly yours,
Robert C. Jones
www.rcjonesinc.com
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