Tuesday, March 5, 2013
Are you having funds wired into your GCF account? Find instructions on our website.
Tax Tip #2 regarding tax obligation on IRA conversions from traditional to Roth in last week's issue was an error. IRAs converted in 2012 are 100% taxable as 2012 income. The tip should have served as a reminder for those converted in 2010. An exception for 2010 conversions only allowed income to be distributed over three years for tax purposes, the final installment being due with your 2012 return. Consult your tax professional for advice on your individual situation. We apologize for any confusion this may have caused.
Our thanks to an attentive reader for bringing this to our attention.
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Is Your Business Ready For Obamacare?
As we draw closer to the 2014 implementation of the Patient Protection and Affordable Care Act of 2010, aka Obamacare, businesses across this country are still unsure exactly what implementations means for them.
It's time to get the gears spinning. The decisions you make this year will have serious impact on how your company operates for years to come.
Business with 50 or more full-time employees must provide healthcare coverage beginning in 2014. Full-time is defined as working 30 or more hours per week. Employers must pay at least 60% of their worker's healthcare costs to provide a plan that meets minimum standards set forth by the Act.
Smaller companies must inform employees in writing about the law and make sure any new healthcare plan they may offer complies.
What are some of the minimum standards for compliance? They can vary by state, but certain specific services are required such as maternity and newborn care, emergency services, mental health and substance abuse services, preventive care and prescription drugs.
Employers who fail to comply will pay a $2,000 penalty per employee to offset the cost of employees using the exchange or an emergency room in lieu of employer based insurance. Businesses with 49 employees that do not provide health care can find themselves facing a $40,000 penalty by hiring just one more person.
Companies will try to avoid penalties by replacing full-timers with part-timers, reducing hours for their current workforce or outsource to subcontractors. Many have already cut worker's hours from 30 hours per week to 28 hours.
Small business employers who buy insurance will pay a $63 annual fee for pre-existing conditions. This fee will be decreased slightly through 2017 when pre-existing conditions are phased out under the Act.
Small business and individual health insurance exchange open enrollment begins Oct 1, 2013. Exchanges allow individuals and small businesses up to 100 employees (50 in certain states) to shop for qualified health insurance coverage online using a one-stop option.
The exchanges will provide side-by-side comparisons of qualified health plans, including their benefits, costs and quality. Employers can offer workers coverage from several insurers and pay one single monthly payment to the exchange rather than premiums to multiple plans.
Exchanges must be ready for business by January 1, 2014. Individual states had until November 2012 to declare whether they would open their own exchanges or default to those operated by the federal government.
Starting in 2017, businesses with more than 100 employees will be allowed to purchase coverage via the exchange.
Eligible employers providing health care coverage will again get a tax credit for up to 35% of their contribution toward employee insurance if they have fewer than 25 full-time employees. The credit is calculated based on average wages and number of employees. For tax year 2014, credit goes to 50%. This helps to offset the cost of providing employee coverage.
The majority of small businesses are operated as sole proprietorships or LLC, both file taxes as individuals on Schedule C of their annual IRS Form 1040. Your Medicare contributions just went up as of tax year 2013 if you're single earning more than $200,000 modified adjusted gross income (magi) or married taxpayers earning over $250,000. A 3.8% Medicare contribution tax will apply to investment income for tax year 2013. This includes interest, dividends, annuities, royalties and rents.
You may have noticed your W-2 issued for 2012 wages listed new information. Included for the first time is a line showing the amount your employer paid for your health care benefit. This is intended to make health care benefits and spending more transparent.
The restaurant industry has additional burden under Obamacare. If you're part of a chain with 20 or more outlets, your menus will have to be recreated to display calorie counts. We'll finally know if the Whopper is better than the Big Mac.
We'll also learn if the pros prove mightier than the cons with this Act, as we've certainly been bombarded by debate on both sides of this issue since its enactment.
Spring Clean Your Data
The groundhog is one lucky critter. He's always in a win/win situation. If the little guy crawls out of his hole and fails to see his shadow, spring is right around the corner. If he does see it, expect six more weeks of winter.
Now, with all due respect to the good officials of Punxsutawney, how do they even know if he saw it or not?
It matters not, as the first official day of spring conveniently falls exactly six weeks after the little rodent finds himself a national celebrity. Either way the groundhog is correct.
Groundhog Day may be the most frivolous of all the unofficial holidays we celebrate in America. Or is it?
January gives us pause from the flurry of the holiday season. Once a Thanksgiving to New Year season, we now begin commemorating the festivities right after Labor Day when Halloween goodies start appearing on store shelves. From there, holidays run back-to-back until the January breather.
Come February, it's time to start getting our lives back in order. We should have received our tax statements by then and started to gather documents to file IRS returns.
And as the groundhog reminds us, spring is just around the corner. For a lot of people, that means cleaning.
We clean our homes of the cobwebs that grew over the winter. We clean our windows when we no longer worry about frozen panes. Ceiling to floor gets a good scrubbing.
Since the seasons overlap, it should be only natural to blend the spirit of cleaning into that of gathering documents. Why not take this opportunity to clean old paperwork out of your files?
Computers were supposed to eliminate physical papers and save trees. At least, that's what they said as they gained popularity.
In truth, we print out more draft copies of documents to share now than we did originals when we fed one sheet at a time into a typewriter. Paperwork gathers despite our best intentions to keep it to a minimum.
Before you just start tossing out old documents, look at them closely to see if any have personal information like your Social Security number, bank or credit card number, or anything an identity thief may find valuable. Shred anything you don't want to fall into the hands of a crook.
Old receipts, expired warranties and outdated insurance policies can get tossed. Ditto with old utility statements and owner's manuals for that refrigerator you replaced two years ago. If you don't need something for tax purposes or as proof of purchase for warranties, it's safe to throw it away. Keep that iffy stuff in a convenient spot so it's easy to get rid of when you realize you didn't really need it after all.
Documents that become life partners include birth and marriage certificates; divorce, adoption or immigration papers; legal documents such as powers of attorney, wills, deeds and contracts; and car titles.
If you already have a digital copy of something, or it's readily available online, trash it. Paper bank or credit card statements serve no purpose if your bank maintains them online. A digital copy is always available at your fingertips, easy enough to download if need be. These should be food for the shredder.
Tax returns and supporting documents should be kept for at least three years. That's how far back the IRS goes with a typical audit. But if you under-report your income by 25 percent or more, the IRS can go back six years to audit. There's no limit to how far back they can go if you file a fraudulent return or fail to file one.
While you're pulling together numbers for your tax preparer, take a few minutes to go over your budget. This is a good opportunity to make adjustments where necessary.
Some people like paper, it just works better for them. Others prefer to go digital. A scanner and good software can make it easier to manage and organize your life. At least, the data portion of it. There are several good, inexpensive tools available for those unafraid to do so.
Perhaps whether or not the groundhog sees his shadow isn't nearly as important as the fact that spring is right around the corner. With it, a reminder to clean out the old and start afresh right along with the new blossoms of life that begin to appear.
Maybe Groundhog Day isn't so frivolous, after all.
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