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Young adult children get expanded coverage | Tax Tip of the Week | No. 42 May 26, 2010

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Changes made by the recently enacted Patient Protection and Affordable Care Act, provide tax-free health coverage for an employee’s children who are under age 27.  The change is effective March 30, 2010.  These changes immediately allow employers with cafeteria plans to permit employees to begin making pre-tax contributions to pay for this expanded benefit.

In addition to extending coverage to older children, the act also requires plans that provide dependent coverage to continue to make the coverage available for an adult child until the child reaches age 26.  The extended coverage must be provided no later than plan years beginning on or after September 23, 2010.  The favorable tax treatment applies to the extended coverage.

IRS Notice 2010-38 explains these changes in greater detail and provides further guidance to employers, employees and health insurers.

As always, feel free to call us anytime to discuss these ever changing laws.

In Dayton, call 937-436-3133 and in Xenia, call 937-372-3504. Or visit http://www.bradstreetcpas.com.

Rick Prewitt – the guy behind TTW

…until next week.

COBRA Extension | Tax Tip of the Week | No. 41 May 19, 2010

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Employees who involuntarily lost their jobs had been eligible to continue their employer sponsored health insurance coverage through a subsidized assistance program.  This means a displaced employee would only need to pay 35% of their COBRA health benefits, and the employer could take a 65% tax credit on their payroll tax returns.  An employee can continue these benefits for up to 15 months.

This plan was set to expire on March 31, 2010.  A new law was recently passed that extends this subsidy program to those eligible employees through May 31, 2010.

This is the second extension of the COBRA subsidy program and many Capitol Hill watchers expect the program will ultimately be extended through the end of 2010.

We’ll keep you posted.

Questions? Just give us a call. In Dayton, call 937-436-3133 and in Xenia, call 937-372-3504. Or visit http://www.bradstreetcpas.com.

Rick Prewitt – the guy behind TTW

…until next week.

Hiring Incentives to Restore Employment (HIRE) Act provides Employer Relief – Tax Tip of the Week | No. 40 May 12, 2010

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New Law Provides Employer Relief

A new law was recently passed called The Hiring Incentives to Restore Employment (HIRE) Act.  The HIRE Act is a $17.5 billion dollar plan that is intended to accelerate the hiring of unemployed workers and further stimulate this uncertain economy.

The law provides relief from the employer share of social security tax payments up to $6,621.60 (6.2% of the $106,800 FICA wage cap).

The employer is still obligated to pay the Medicare portion of the payroll taxes, the regular tax withholding payments and the employee share of FICA and Medicare.  The “credit” is taken when the employer files their Form 941 payroll tax returns.

Employers are eligible to take this credit for new hires that have been unemployed for at least 60 days.  Employment must begin after February 3, 2010 and before January 1. 2011.

In addition, the bill provides a $1,000 credit to the employer if the new hire is employed for at least 52 consecutive weeks.  This credit would be taken on the employer’s 2011 income tax return.

As always, careful record keeping must be done to take advantage of these tax incentives.  You will definitely want to give us a call if you know of anyone looking to hire new employees.

Questions? Just give us a call. In Dayton, call 937-436-3133 and in Xenia, call 937-372-3504. Or visit http://www.bradstreetcpas.com.

Rick Prewitt – the guy behind TTW

…until next week.

Required Minimum Distribution (RMD) for 2010 – Tax Tip of the Week | May 5, 2010 | No. 39 May 5, 2010

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The Suspension is over

As you may remember, the requirement to take a Required Minimum Distribution (RMD) was suspended for 2009.

Starting in 2010, anyone over age 70 ½ with an IRA or other qualified retirement plan must receive their RMD each year.  There are penalties if the RMD is not taken.

If you, or anyone you know, is over 70 ½, double check with the administrator of your plan that these distributions are scheduled for this year.

You might have some questions on this one… Just give us a call. In Dayton, call 937-436-3133 and in Xenia, call 937-372-3504. Or visit http://www.bradstreetcpas.com.

Rick Prewitt – the guy behind TTW

…until next week.