COBRA Subsidy Eligibility Period Extended to May 31

COBRA Subsidy Eligibility Period Extended to May 31

by | Apr 27, 2010 | Archives

WASHINGTON — Workers who lose their jobs during April and May may qualify for a 65-percent subsidy on their COBRA health insurance premiums, according to the Internal Revenue Service. The American Recovery and Reinvestment Act established this subsidy to help workers who lost their jobs as a result of the recession maintain their employer sponsored health insurance.

The Continuing Extension Act of 2010, enacted April 15, reinstated the COBRA subsidy, which had expired on March 31. As a result, workers who are involuntarily terminated from employment between Sept. 1, 2008 and May 31, 2010, may be eligible for a 65-percent subsidy of their COBRA premiums for a period of up to 15 months. In some cases, workers who had their hours reduced and later lose their jobs may also be eligible for the subsidy.

Employers must provide COBRA coverage to eligible individuals who pay 35 percent of the COBRA premium. Employers are reimbursed for the other 65 percent by claiming a credit for the subsidy on their payroll tax returns: Form 941, Employers QUARTERLY Federal Tax Return, Form 944, Employer’s ANNUAL Federal Tax Return, or Form 943, Employer’s Annual Federal Tax Return for Agricultural Employees. Employers must maintain supporting documentation for the claimed credit.

There is much more information about the COBRA subsidy, including questions and answers for employers, and for employees or former employees, on the COBRA pages of IRS.gov.

Some people who are eligible for the COBRA subsidy also qualify for the health coverage tax credit (HCTC) and may want to choose the more generous HCTC benefit, instead. The HCTC pays 80 percent of health insurance premiums for those who qualify. See more at HCTC: Eligibility Requirements and How to Receive the HCTC.

Estate Tax Still in Limbo

Estate Tax Still in Limbo

by | Apr 26, 2010 | Archives

Houston gas pipeline mogul Dan Duncan was the 74th richest person in the world when he died on March 28. If he’d passed away three months earlier or ten months later, his $9 billion estate could have generated up to $4 billion for the IRS. But because there’s no federal estate tax this year, the government gets nothing. Of course, that kind of money sitting on the table evokes the question of making the estate tax retroactive. Uncle Sam isn’t likely to want to pass on this. However, big estates mean big lawyers ready to fight to see those billions of dollars go to the deceased’s heirs.

Most of the buzz early in the year seemed to suggest that Congress was heading back to the drawing board in 2010 with their sights set on fixing the Federal Estate Tax threshold somewhere very close to the 2009 numbers of a $3.5 Million exemption amount and a 45% tax rate. President Obama even used these figures as a baseline for his 2010 budget. Now it is almost May and nothing has been done. As the months pass, one wonders if Congress may leave it alone and let the law take care of the matter, re-instating the estate tax threshold in 2011 back to $1 Million and 55%, a sure way to generate income for Washington, and no one has to actually take the political heat for making a tough decision. After all, it’s not like they haven’t known this was coming for the last ten years!
 
Now is the time for you to consider reviewing your estate tax planning needs, no matter how old you are or what the size of your estate is currently. Life insurance, retirement accounts, trusts, wills and powers should all be reviewed and updated if need be. I can help you with this today!
 

Five Tips for Great Record-Keeping

Five Tips for Great Record-Keeping

by | Apr 23, 2010 | Archives

There are many records you have that may help document items on your tax return. You’ll need this documentation should the IRS select your return for examination. Here are five tips from the IRS about keeping good records.

  1. Normally, tax records should be kept for three years.
  2. Some documents — such as records relating to a home purchase or sale, stock transactions, IRA and business or rental property — should be kept longer.
  3. In most cases, the IRS does not require you to keep records in any special manner. Generally speaking, however, you should keep any and all documents that may have an impact on your federal tax return.
  4. Records you should keep include bills, credit card and other receipts, invoices, mileage logs, canceled, imaged or substitute checks, proofs of payment, and any other records to support deductions or credits you claim on your return.
  5. For more information on what kinds of records to keep, see IRS Publication 552, Recordkeeping for Individuals, which is available at IRS.gov or by calling 800-TAX-FORM (800-829-3676).