Posts Tagged - ‘taxes’

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IRS’ Affordable Health Insurance Reform Implementation in Danger

Wednesday, October 27th, 2010

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Understandably, most people aren’t huge fans of the IRS. For the most part, Americans communicate with them when they’re taking money out of their pockets during tax season. However, a provision of the new healthcare reform law has the Internal Revenue Service actually attempting to give money back!

The law is meant to make affordable health insurance more widely available through tax credits to small businesses that provide coverage to their employees. Doing so will require more manpower and resources for implementation and enforcement of the program. Some Republican candidates are considering defunding the IRS and other agencies involved to stifle healthcare reform, since it is predicted to take $5 to $10 billion for each agency to fully implement it.

Congress has the power to do so, and does not require President Obama to sign off on a repeal he would be guaranteed to veto. Ironically, one of the most business-friendly provisions may suffer as a result.

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Self-Employed Health Insurance Plans To See Tax Breaks

Wednesday, October 13th, 2010

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Unlike employees with corporate-sponsored health insurance, the self-employed have had to take charge of their own health care. In most cases, they must pay for their health insurance plans out of pocket.

This year, a provision in the Small Business Jobs and Credit Act will allow self-employed S-corp, single member LLC, or sole proprietorship business owners to deduct the cost of health insurance premiums from their tax returns. Like other corporations, they can deduct health care as a business expense for their 2010 tax returns.

This is especially helpful since sole proprietors have to pay both the employer and employee portions of payroll taxes.

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Healthcare Reform Complicates Tax Reporting

Thursday, July 8th, 2010

As most know, the healthcare reform law includes an affordable individual health insurance mandate, intended to bring more people into the pool and make health care less expensive for all.

According to the provision, the IRS is responsible for enforcement of the medical insurance mandate. Non-exempt individuals or employers who violate it will charged penalties on their tax returns. However, there are doubts that the Internal Revenue Service is up to the task.

The requirement also creates more complications for business and nonprofit accountants when filing tax returns. In an attempt to reduce underreporting of income (which would reduce federal funding for medical insurance reform), they will now be responsible with keeping records of the 1099 forms they will have to have for all transactions over $6,000, as of 2012.

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Healthcare Reform Reduces Tanning Bed Use

Wednesday, June 9th, 2010

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A provision of the Obama administration’s healthcare reform kills two birds with one stone: a 10% tax on UV tanning beds raises money to fund the legislation, while simultaneously discouraging a practice that increases the risk of developing skin cancer.

Even tan addicts are either giving up their habit or switching to safer spray tans: none other than reality TV star Snooki of MTV’s Jersey Shore fame says that she’s scaled back due to the tax, although she can certainly afford it now. According to her, Obama’s presidential rival Sen. John McCain wouldn’t have targeted the cast of her show with the tax.

That’s certainly possible, because McCain didn’t support comprehensive affordable health insurance reform. However, it’s doubtful that he–as a melanoma survivor–was doing it for Snooki and co.’s benefit.

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Tobacco Industry Bilks Children’s Health Insurance Plan

Thursday, June 3rd, 2010

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A tax on tobacco products–intended to provide children with health insurance–brought in less money than expected last year. A loophole is to blame.

Tobacco companies began marketing loose rolling tobacco as pipe tobacco, and therefore paying the far lower tax rate for the latter ($2.83 vs. $24.78 per pound). In addition, production of pipe tobacco products has ramped up unusually.

The Obama administration believes that over $250 million in predicted funding for kids’ health insurance plans, such as SCHIP, was lost due to the industry changes. A bill is currently pending in Congress to make the tax rates equal has received little attention thus far.

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Family Businesses Ineligible For Health Insurance Tax Credits

Tuesday, June 1st, 2010

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Soon, tax credits will be provided to small businesses to help them afford group health insurance. However, those firms completely or mostly staffed by family members may not be able to take advantage of the 35% to 50% benefit.

Why? Family members have historically been exempt from business tax credit programs, because of the potential of unfairness and abuse of the system and nonrelated taxpayers.

Which employees won’t count towards the amount of tax credit received? According to the IRS, family members are considered to be:

  • A child or grandchild of the owner
  • a sibling or step-sibling
  • In-laws
  • Aunts and uncles
  • Parents, grandparents, and step-parents and step-grandparents
  • Nieces and nephews

The healthcare reform law will have little benefit for small businesses mostly staffed by relatives. However, those with relatively few family members employed will experience more positives.

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Ron Paul Proposes His Own Healthcare Reform Bill

Friday, May 28th, 2010

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Representative Ron Paul, a libertarian Republican and 2008 presidential primary candidate (and father of Tea Party backed Senate candidate Rand Paul), has written and proposed his own version of healthcare reform. If the GOP is truly interested in fixing the system and not simply scoring political points, they should consider it.

In keeping with his beliefs, the Private Option Health Care Act pending in the House of Representatives seeks to largely keep the government out of private business. There is no mandate to pay a fine if you don’t purchase a qualifying health insurance plan. It uses tax deductions and credits to make insurance more affordable, while encouraging people to sign up for Health Savings Accounts and other high-deductible coverage options that cause them to take greater responsibility for their health care.

It also uses the Constitution’s commerce clause–ironically under fire by Obama reform opponents–to allow the interstate selling and purchase of health insurance plans. At the same time, people will now be able to import prescription drugs from reputable countries with high quality control, like Canada and those in Western Europe. Tort reform is also involved, obviously, as a method of cutting costs. At the same time, consumer protection will be retained through a tax credit that pays for insurance against negative medical outcomes.

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Not Mmm-Mmm Good: Healthcare Reform Hurts Campbell’s Soup Profits

Monday, May 24th, 2010

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Yet another corporation has modified their financial statements to account for the negative impact of healthcare reform. This time it’s Campbell’s Soup.

Although sales of its products actually rose in the fiscal third quarter, the charges related to the health insurance plan legislation are one of the factors leading to a 3.4% decrease in profit.

Accounting principles require companies to predict future losses. Many firms are preparing for the increased burden of employees’ insurance, as well as the possibility of higher taxes.

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Which Businesses Are Eligible for Health Insurance Tax Credit?

Friday, May 21st, 2010

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One of the near-immediate benefits of healthcare reform is the creation of tax credits for small businesses, meant to encourage them to offer health insurance coverage to their employees.

The government has released guidelines detailing which companies are eligible for at least a partial subsidy. They are those that have:

  • Under 25 employees, and
  • an average salary less than $50,000 per year

However, in order to take advantage of the full 35% tax credit offsetting health insurance plan premiums, firms must have:

  • Fewer than 10 employees, and
  • an average annual salary under $25,000

Some small businesses believe that it’s a perverse incentive, given the fact that some companies would have to fire workers or cut their pay in order to become eligible.

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Obama Continues To Promote Health Insurance Reform

Monday, May 10th, 2010

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The marketing campaign is seemingly endless. President Obama is once again touting what he considers as the benefits of affordable health insurance reform.

During his weekly internet and radio address, Obama says that there are already signs of immediate benefits. Even before most of the provisions will become effective, health insurers are taking steps in advance to increase accountability and be more consumer-friendly. They are ending the practice of rescinding policies, and extending coverage for young adults before it is required in order to eliminate gaps.

The president continued to strike at the health insurance companies in order to shore up support for the law before much of his party is up for re-election, while promoting that fact that up to 4 million individuals and small businesses may see tax cuts this year.

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