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What’s in store for 2011 and 2012 | Dissecting the Healthcare Bill – Part 2 of 4 | Tax Tip of the Week | No. 47 June 30, 2010

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Last week we looked at the changes this bill created for 2010.  This week we highlight the changes for 2011 and 2012.

2011 Highlights

2012 Highlights

Next week we will look at this “1099 Nightmare” in more detail.

Questions or comments? In Dayton, call 937-436-3133 and in Xenia, call 937-372-3504. Or visit our web site.

Rick Prewitt – the guy behind TTW

…until next week.

What you need to know for 2010 – Dissecting the Healthcare Bill – Part 1 of 4 | Tax Tip of the Week | No. 46 June 23, 2010

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We are going to start a four-part series of Tax Tips to take a look at the Patient Protection and Affordable Care Act and the Health Care & Education Affordability Act.  These acts represent over 2400 pages of new laws and are collectively called the Healthcare Bill.

Despite widespread belief that health coverage is mandatory now, the mandate for health insurance coverage does not actually take effect until 2014.  In fact, some provisions of the Healthcare Bill do not take effect until 2018.

This week we will highlight the changes that take effect in 2010.  Subsequent Tax Tips will look at future changes.

Here is what you need to know for 2010:

There are many unknown and unanswered questions about this mammoth and far reaching bill.  As Speaker of the House, Nancy Pelosi said, “Let’s pass this bill and see what is in it.”

We’ll find out together.

Questions? 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.

Tax and Asset Protection Considerations in choosing a business entity | Tax Tip of the Week | No. 45 June 16, 2010

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When your accountant or attorney wants to discuss entity choice, they are referring to the various types of business entities or structures available.  Generally speaking, the relevant options available for most businesses including start-ups are:

1.   LLCs (limited liability company)
2.   S corporation
3.   C corporation
4.   Limited partnership
5.   General partnership
6.   Sole proprietorships

When considering the pros and cons of each type of entity, the many multifaceted issues may be grouped into two broad categories:

A.   Taxation
B.   Asset protection

Taxation
Taxation issues may vary significantly by entity choice.  For example, the sale and liquidation of a C corporation may result in double taxation whereas the sale of an S corporation, LLC, or a partnership may result only in single taxation.  Entity differences also exist between the different categories of income – ordinary, capital gain, passive, investment, and self employment income.  All of which may be taxed at different rates.

Taxable compensation inside corporations is affected by the number of owners and their involvement in the business.  For both C and S corporations, reasonableness of compensation can be a huge issue. For C corporations, the issue can be whether an owner’s salary is too high in comparison to any dividends paid.  For S corporations, the issue is whether the salary is too low in relation to distributions paid.

Often, in the early years of a business or in today’s economy, the ability to use losses can be important in the choice of a business structure. Generally speaking, third party debt may create tax basis for owners.  In this respect, LLCs, partnerships, and sole proprietorships provide better opportunities for passing through losses to the owners than do S corporations.

Asset Protection
Asset protection will vary by state and type of entity.  One should consult with their attorney for the particular details.  Remember that the limited liability or asset protection is usually designed to protect the owner’s personal assets and not to protect the entity itself.  Thus, the entity may not be the safest place to save money.

Please let us know if you have any questions while walking through this mine field of entity choice.  Future laws will affect this process as well.  Sometimes, one entity may be later exchanged for another but often in reality you may be locked into your existing structure, thus, making entity choice a very important decision.

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

Mark Bradstreet – Author of this week’s TTW
Rick Prewitt – the guy behind TTW

…until next week.

Energy Tax Credit Update | Tax Tip of the Week | No. 44 June 9, 2010

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Go Green and Save Some Green

During the recent 2009 tax filing season, we saw many clients take advantage of the Residential Energy Tax Credit.

As a reminder, this credit is available to homeowners who install energy-efficient:

The credit is 30% of the cost of the qualified energy-efficient property up to a maximum of $1,500 (example:  $5,000 new windows X 30% = $1,500.)

If you did not take the maximum credit in 2009, it is still available to be taken on your 2010 tax return.  Note:  The $1,500 credit is the maximum you can claim for 2009 and 2010 combined.

In addition, this is one of the few credits that is not limited by AGI—meaning higher income taxpayers can also use this credit.

Take a look at your home this summer and see what improvements need to be made with Uncle Sam’s help!

As always, give us a call before you do something – not after!

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

Health Coverage Tax Credit for Small Employers | Tax Tip of the Week | No. 43 June 2, 2010

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One of the provisions of the Patient Protection and Affordable Care Act is a credit designed to encourage small employers to offer health insurance coverage for the first time or maintain coverage they already have.  In general, the credit is available to small employers that pay at least half the cost of single coverage for their employees.

The maximum credit is 35% of premiums paid in 2010 by eligible small business employers.  In 2014, this maximum credit increases to 50%.

The credit is specifically targeted to help small businesses that primarily employ low and moderate income workers.  It is generally available to employers that have fewer than 25 full-time employees paying wages averaging less than $50,000 per employee per year.

There are also special rules for non-profit organizations to encourage health insurance coverage.

Give us a call if you want to discuss the details of this new act.

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.