Posts tagged health care
Health Insurance Tax Breaks for the Self-Employed
Mar 15th
IRS Tax Tip 2011-51, March 14, 2011, http://1.usa.gov/fiCYe7
Here is some information from the IRS about a special tax deduction for the self-employed. You may be able to deduct premiums paid for medical and dental insurance and qualified long-term care insurance for you, your spouse, and your dependents if you are one of the following:
- A self-employed individual with a net profit reported on Schedule C (Form 1040), Profit or Loss From Business, Schedule C-EZ (Form 1040), Net Profit From Business, or Schedule F (Form 1040), Profit or Loss From Farming.
- A partner with net earnings from self-employment reported on Schedule K-1 (Form 1065), Partner’s Share of Income, Deductions, Credits, etc., box 14, code A.
- A shareholder owning more than 2% of the outstanding stock of an S corporation with wages from the corporation reported on Form W-2, Wage and Tax Statement.
The insurance plan must be established under your business.
- For self-employed individuals filing a Schedule C, C-EZ, or F, the policy can be either in the name of the business or in the name of the individual.
- For partners, the policy can be either in the name of the partnership or in the name of the partner. You can either pay the premiums yourself or your partnership can pay them and report the premium amounts on Schedule K-1 (Form 1065) as guaranteed payments to be included in your gross income. However, if the policy is in your name and you pay the premiums yourself, the partnership must reimburse you and report the premium amounts on Schedule K-1 (Form 1065) as guaranteed payments to be included in your gross income. Otherwise, the insurance plan will not be considered to be established under your business.
- For more-than-2% shareholders, the policy can be either in the name of the S corporation or in the name of the shareholder. You can either pay the premiums yourself or your S corporation can pay them and report the premium amounts on Form W-2 as wages to be included in your gross income. However, if the policy is in your name and you pay the premiums yourself, the S corporation must reimburse you and report the premium amounts on Form W-2 as wages to be included in your gross income. Otherwise, the insurance plan will not be considered to be established under your business.
For more information see IRS Publication 535, Business Expenses, available at http://www.IRS.gov or by calling 800-TAX-FORM (800-829-3676).
Links:
IRS Publication 535, Business Expenses ( PDF)
IRS Helps Small Employers Claim New Health Care Tax Credit; Forms and Additional Guidance Now Available on Small Business Health Care Tax Credit
Dec 3rd
IR-2010-117, Dec. 2, 2010, http://bit.ly/enp6Lw
WASHINGTON — Yesterday the Internal Revenue Service released final guidance for small employers eligible to claim the new small business health care tax credit for the 2010 tax year. Yesterday’s release includes a one-page form and instructions small employers will use to claim the credit for the 2010 tax year.
New Form 8941, Credit for Small Employer Health Insurance Premiums, and newly revised Form 990-T are now available on IRS.gov. The IRS also posted on its website the instructions to Form 8941 and Notice 2010-82 , both of which are designed to help small employers correctly figure and claim the credit.
Included in the Affordable Care Act enacted in March, the small business health care tax credit is designed to encourage both small businesses and small tax-exempt organizations to offer health insurance coverage to their employees for the first time or maintain coverage they already have.
The new guidance addresses small business questions about which firms qualify for the credit by clarifying that a broad range of employers meet the eligibility requirements, including religious institutions that provide coverage through denominational organizations, small employers that cover their workers through insured multiemployer health and welfare plans, and employers that subsidize their employees’ health care costs through a broad range of contribution arrangements.
In general, the credit is available to small employers that pay at least half of the premiums for single health insurance coverage for their employees. It is specifically targeted to help small businesses and tax-exempt organizations that primarily employ moderate- and lower-income workers.
Small businesses can claim the credit for 2010 through 2013 and for any two years after that. For tax years 2010 to 2013, the maximum credit is 35 percent of premiums paid by eligible small businesses and 25 percent of premiums paid by eligible tax-exempt organizations. Beginning in 2014, the maximum tax credit will increase to 50 percent of premiums paid by eligible small business employers and 35 percent of premiums paid by eligible tax-exempt organizations.
The maximum credit goes to smaller employers –– those with 10 or fewer full-time equivalent (FTE) employees –– paying annual average wages of $25,000 or less. The credit is completely phased out for employers that have 25 or more FTEs or that pay average wages of $50,000 or more per year. Because the eligibility rules are based in part on the number of FTEs, not the number of employees, employers that use part-time workers may qualify even if they employ more than 25 individuals.
Eligible small businesses will first use Form 8941 to figure the credit and then include the amount of the credit as part of the general business credit on its income tax return.
Tax-exempt organizations will first use Form 8941 to figure their refundable credit, and then claim the credit on Line 44f of Form 990-T. Though primarily filed by those organizations liable for the tax on unrelated business income, Form 990-T will also be used by any eligible tax-exempt organization to claim the credit, regardless of whether they are subject to this tax.
More information about the credit, including a step-by-step guide to claiming the credit and answers to frequently asked questions, is available on the Affordable Care Act page on IRS.gov.
Health Care: Flexible Spending Arrangements & 2011 Changes
Oct 11th
IR-2010-95, Sept. 3, 2010, http://bit.ly/9olbku
WASHINGTON — The Internal Revenue Service issued guidance reflecting statutory changes regarding the use of certain tax-favored arrangements, such as flexible spending arrangements (FSAs), to pay for over-the-counter medicines and drugs.
The Affordable Care Act, enacted in March, established a new uniform standard that, effective Jan. 1, 2011, applies to FSAs and health reimbursement arrangements (HRAs). Under the new standard, the cost of an over-the-counter medicine or drug cannot be reimbursed from the account unless a prescription is obtained. The change does not affect insulin, even if purchased without a prescription, or other health care expenses such as medical devices, eye glasses, contact lenses, co-pays and deductibles. The new standard applies only to purchases made on or after Jan. 1, 2011, so claims for medicines or drugs purchased without a prescription in 2010 can still be reimbursed in 2011, if allowed by the employer’s plan.
A similar rule goes into effect on Jan. 1, 2011 for Health Savings Accounts (HSAs), and Archer Medical Savings Accounts (Archer MSAs).
Employers and employees should take these changes into account as they make health benefit decisions for 2011.
For details on current rules, see Publication 969 , Health Savings Accounts and Other Tax-Favored Health Plans.
Updates on this and other health care reform provisions can be found on the Affordable Care Act page on IRS.gov. Notice 2010-59 and Revenue Ruling 2010-23, posted today, further explains this change.
Related Item: Questions and Answers on Over-the-Counter Medicines and Drugs
You might also be interested in watching this YouTube video: Flexible Spending Arrangements, http://bit.ly/aPhEPy.
Six Months of the Affordable Care Act: Real Rights, Real Protections, Real Benefits for Real People
Sep 23rd
By Kathleen Sebelius, Secretary of Health and Human Services
In the six months since President Obama signed the Affordable Care Act into law, we have been hard at work implementing the law and focusing on putting consumers ahead of insurance companies.
Already, millions of Americans are seeing the benefits:
- Nearly 4 million employees working for small businesses can benefit from small business tax credits to help employers cover their employees.
- Thousands of uninsured Americans who had been locked out of the market due to pre-existing conditions have signed up for the Pre-Existing Condition Insurance Plan.
- More than 2,000 businesses have been accepted into the Early Retiree Reinsurance Program, which provides them much needed financial support to continue coverage for retired Americans not yet eligible for Medicare.
- More than one million Medicare beneficiaries have received a $250 check to help them afford the cost of prescription drugs in the Part D “donut hole” coverage gap.
We’ve also kept a close eye on insurance companies, calling out unjustified premium increases and encouraging them to put in place common sense policies.
This week, there a number of other benefits are beginning to take effect, charting out new rules of the road for health insurance companies:
- Putting an End to Insurance Company Abuses: If you pay your premium every month, they won’t be allowed to take away your health insurance just because of a mistake in your paperwork.
- Ensuring Benefits for Patients. Patients will be able to get the care they need without lifetime limits capping their insurance benefits. And eventually, they won’t face annual benefit limits either. In many plans, you’ll have access to preventive services without cost sharing and new rights to appeal decisions by your insurance company that deny you benefits.
- Coverage for Kids and Young Adults. Nearly all insurers will no longer be able to deny coverage to children due to pre-existing conditions. And if an insurance plan covers dependents, they’ll have to cover most young adults up to age 26.
We still have a long way to go until 2014, when the new health insurance Exchanges are in place, and additional provisions get us closer to all Americans having access to affordable, quality health insurance. But we are making big steps in the right direction, thanks to the Affordable Care Act.
Getting Your Kid Covered and in the Game
Aug 13th
Here is my confession: when the World Cup was televised last month, I didn’t view a single game. When people talk about “March Madness,” I think they’re talking about the quirkiness of the weather. I love riding my bike – but not watching the Tour de France.
| Even though I’m not much of a sports fan, I knew how important it was to go and cheer on my daughters when they played field hockey in high school. Physical activity is so important for good health – and organized sports are the best way to get most kids moving. When it comes to participating in school and community sports, nothing should stand in a child’s way – especially the lack of affordable health insurance. |  |
But without health insurance, it’s hard for kids to get the physical exams they need to be able to play. For other families, the fear of medical bills that could result from a sports injury leave them reluctant to let their children participate.
To read the rest of this article by Cindy Mann, Deputy Administrator and Director of the Center for Medicaid, CHIP, and Survey & Certification at the Centers for Medicare and Medicaid Services, please go to http://bit.ly/cE3HIQ.
No Tax on Health Care Benefits for 2010 or 2011 or…
Jul 12th
How can you tell it’s an election year? By the sheer number of scare tactics and outright lies being shuffled about.
An email is making the rounds – again – suggesting that health care benefits will appear on forms W-2 and will be taxed.
To read the rest of the article, please go to http://bit.ly/9WYZYp
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