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As we move into the final quarter of 2010, it’s time to revisit current and pending changes in the tax laws that may affect you or your business. Congress has already enacted several pieces of legislation, and it is possible that more changes will come before the end of the year. Although certainly a mixed bag, the good news is you still have time to plan for 2010 and beyond.
Health Care Reform
The cornerstone of Health Care Reform (The Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010), is increased health insurance coverage mandates on individuals and employers. Many of the provisions, including “penalty taxes” for non-compliance with the coverage mandates, have delayed effective dates beyond 2010.
Effective March 30, 2010, the new law extended the general exclusion from taxable income, reimbursements for medical care expenses under an employer-provided accident or health plan, to any child of an employee who has not attained age 27 as of the end of the tax year. Self-employed individuals are permitted to take a deduction for the health insurance costs of any child of the taxpayer who has not attained age 27 as of the end of the tax year.
Also beginning in 2010, small employers (25 or fewer full-time equivalent employees) may be eligible for a tax credit for certain contributions to purchase health insurance for their employees if the employer contributes at least half of the total premium cost. For tax years beginning in 2010 until 2013, the credit is 35 percent of the premium contributions, then increases to 50 percent in 2014. The credit “phases out” for employers with more than 10 employees and for employers whose employees’ average annual full-time equivalent wages exceed $25,000. The credit is completely phased out when the employees’ average annual full-time equivalent wages exceed $50,000.
Start planning early, stay in touch with your benefits and professional service providers and stay informed. HeathCare.GOV has the most up-to-date information regarding the new legislation.