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Monthly Archives

August 2010


By 2010, Tax Tips

W-2 Reminder

Shareholder health insurance premiums must be included in Box 1 of the W-2 form and Box 14 in order for the shareholder to deduct this amount on their personal tax return.

If you use a payroll service bureau this amount needs to be reported to them when you process your last payroll of the year.

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The HIRE Act and How It May Impact Your Business (reminder)

By 2010, Tax Tips

IRS form W-11 is to be used as an affidavit for new employees to complete and sign if they are eligible for the new HIRE credit.

Employers do not have to pay the matching Social Security tax (6.2%) on the wages of workers hired after February 3, 2010 if they worked less then 40 hours in the previous 60 days. The exemption applies to wages paid after March 18, 2010 and before January 2, 2011.

The exemption is claimed on Form 941. The 6.2% exemption for qualified wages the employers pay from March 19 through March 31 will be claimed on the 941 for the second quarter. IRS has revised the 941 form to reflect the exemption. In the interim, employers can reduce their tax deposits by the amount of the exemption or elect to receive the overpayment their 941.

There will also be a credit if the individual remains with the employer for 52 consecutive weeks. This business credit will be the lesser of $1,000 or 6.2 percent of the wages paid by the employer to the retained worker during the 52 consecutive week retention period.

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Affordable Care Act Tax Provisions

By 2010, Tax Tips

The Affordable Care Act was enacted on March 23, 2010. It contains some tax provisions that take effect this year and more that will be implemented during the next several years.

News For 2010: Tax Credit Helps Small Employers Provide Health Insurance Coverage.

WASHINGTON – Many small businesses that provide health insurance coverage to their employees now qualify for a special tax credit, according to the Internal Revenue Service.

Included in the health care reform legislation, the Patient Protection and Affordable Care Act, approved by Congress and signed by President Obama on March 23. The credit is 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 percent of premiums paid in 2010 by eligible small business employers. In 2014, this maximum credit increases to 50 percent of premiums paid by eligible small business employers.

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 equivalent (FTE) employees paying wages averaging less than $50,000 per employee per year. Because the eligibility formula is based in part on the number of FTEs, not the number of employees, many businesses will qualify even if they employ more than 25 individual workers.

The maximum credit goes to smaller employers – those with 10 or fewer FTEs – paying annual average wages of $25,000 or less.

When we prepare your 2010 tax return we will require additional information from you to calculate if you are eligible for this credit.

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Colorado State Sales/Use Tax Filing will be changing

By 2010, Tax Tips

Effective with the September 2010 Returns.

The Department of Revenue is developing a new computer system to manage Colorado sales and use taxes. They will begin to use the new system when they process September 2010 filing period returns, which are due October 2010. The improved system will allow them to process taxes more efficiently and better assist businesses. But with the improvements will come some changes in how certain types of sales tax filers submit their returns.

No major changes are anticipated for the Colorado sales tax return. However, businesses with more than one location will file a separate return for EACH of the business’s locations- reporting all taxes for that location, including sate and special district sales taxes. The state and special district taxes will not be combined on one sales tax return as currently filed.

Taxpayers who use spreadsheets to file their sales tax will not be able to use their current spreadsheet filing methods after September. There will be an option to electronically file those returns.

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Federal Tax Deposit Coupon

By 2010, Tax Tips

All Employers and Corporations will have to use EFTPS soon. Banks will no longer be allowed to accept tax deposits after December 31, 2010 (so the last payment of the 4th quarter will have to be electronic). Smaller employers will still be able to remit with their 941, if below the limit (currently 2,500).

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Major Changes to 1099 Information Reporting Laws (update)

By 2010, Tax Tips

The passage of the Healthcare reform bill included some of the most drastic changes to 1099 information reporting in over a decade. The bill included revenue raising provisions meant to seek greater compliance of the tax code via 1099 information reporting. General provisions included:

  • The elimination of the corporate exemption from 1099-MISC reporting. (Public Law 111-148)
  • The requirement to report payments for property (goods, materials, merchandise, supplies, etc.). (Public Law 111-148)
  • A six fold increase in penalties from $250,000 to 1.5 million(H.R.4213,H.R.4849)
  • A doubling of penalties per record from $50 to $100. (H.R.4213,H.R.4849)

Beginning for payments made after December 31, 2011, companies will be required to furnish and file form 1099-MISC for payments made to all for-profit companies regardless of corporate status. In addition all payments for goods, materials, merchandise, supplies, and other property will need to be reported as well. Early indication reveal that these changes will likely cause the 1099 reporting volume to increase significantly for most companies as well as the associated B-Notices.

While the law applies to payments made after December 31, 2011 companies need to make broad changes to: 1) W-9 procedures to include all vendors. 2) solicit W-9’s for corporate vendors. 3) Prepare for larger 1099 year-end printing, mailing and filing. 4) Make the appropriate budgetary and system updates to accommodate these changes.

This requirement is coming under much fire from many organizations and stands a good chance of being repealed prior to enactment.

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