Richard A. Lindsey, CPA

Lindsey & Waldo, LLC – Certified Public Accountants

  • Sep 23

    If you’re looking for new workers, Uncle Sam may chip in to help you hire those who are currently jobless. The HIRE (Hiring Incentives to Restore Employment) Act, which President Obama signed into law on March 18, created two new tax benefits designed to stimulate the hiring of employees in addition to retaining them. The Act encourages the hiring of “qualified employees” by exempting the employer from the normal social security match of 6.2% of gross wages for the 2010 year. The Act also allows up to a $1,000 credit for retaining these workers for 52 weeks. So what qualifies an employee? A qualifying employee is one who:

    • Is hired after February 3, 2010 and before January 1, 2011;
    • Is not hired to replace another employee unless the replaced employee left voluntarily or for cause;
    • Is not related to the employer;
    • And certifies under penalty of perjury that he or she has not been employed for more than 40 hours during the 60-day period ending on the date that employment begins with the new employer by completing Form W-11.

    The next question is how do you, the employer, get these credits? First, have the newly hired employee complete Form W-11. This is a single page affidavit that the employee completes certifying that they have not worked more than 40 hours in the prior 60-day period. Then, for any payroll the employee earns after March 18, 2010, the employer can exclude from their payroll tax deposit the 6.2% social security match portion. If you do your own payroll, it would be a good idea to check your software to see if it has made provisions for the update.

    The second part of the tax incentive lies in employment retention. For each unemployed worker retained for at least a year, businesses may claim a new hire retention credit of up to $1,000 per worker when they file their 2011 income tax returns. These two tax benefits are especially helpful to employers who are adding positions to their payrolls.

    This is a great opportunity if you need employees. Don’t miss out!

  • Sep 17

    Many parents who work or are looking for work must arrange for care of their children under 13 years of age during the school vacation.

    Here are five facts you should know about a tax credit available for child care expenses. The Child and Dependent Care Credit is available for expenses incurred during the lazy hazy days of summer and throughout the rest of the year.

    • The cost of day camp can count as an expense towards the child and dependent care credit.
    • Expenses for overnight camps do not qualify.
    • If your childcare provider is a sitter at your home or a daycare facility outside your home, you’ll get some tax benefit if you qualify for the credit.
    • The actual credit can be as much as 35 percent of your qualifying expenses, depending on your income.
    • You may use up to $3,000 of the unreimbursed expenses paid in a year for one qualifying individual or $6,000 for two or more qualifying individuals to figure the credit.

    The credit may also be available for your spouse or dependent over age 13 who is not able to care for himself or herself.

  • Sep 10

    When I decided I would go back to school and become a CPA, I made that my job. Here I was 33 years old, married with two little girls and I was going back to school full time. I’d earned a bachelor’s degree in marketing 12 years earlier. Looking back on it, I don’t recall with clarity how we made it but I think that’s when we racked up a bunch of debt by putting our groceries on credit cards. More than once, I was a little scared that house of cards was going to come crashing down on me. Thankfully, I learned better and those days are long behind me. But not so for our Congress…

    Congress’ plan, especially when it comes to health care, is apparently, let’s have a party now and pay for our binge-spending “later.” After all, like many a college sophomore, Congress figures Mom and Dad always have a little bit more money. Well guess what, you and I are Mom and Dad, and I don’t know about you, but I’m not tapped into a limitless supply.

    Congress’ current plan, at the direction of the President, is to raise Medicare taxes an additional 0.9% for individuals earning wages of more than $200,000 a year and couples earning more than $250,000. For the first time ever, Medicare has been expanded to include more than wages. In what looks to be the biggest revenue raiser in the health-care law over the next decade, a new 3.8% Medicare tax will be applied to investment income of individuals with adjusted gross income (AGI) above $200,000 and couples with AGI above $250,000. They have decided that those Americans are the ones wealthy enough to pay for health insurance for everyone.

    Of course, it’s popular with the middle class, but not so popular with those “high” dollar earners asked to pay for, well, everything. But, if you fall below the threshold of being “wealthy” today, don’t breathe a sigh of relief just yet – the $200,000 and $250,000 thresholds aren’t indexed for inflation! So the scary thing is… it may well creep up on you in coming years.

  • Sep 3

    Recently, two pieces of legislation, the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 were signed into law. Together these pieces of legislation make the most significant reform to health care in the United States since the enactment of Medicare under the Johnson administration in 1965. The Congressional Budget Office estimates that by 2019, approximately 32 million currently uninsured Americans will have health insurance, at a cost of about $940 billion. A major component of the reform legislation is the creation of state-based American Health Benefit Exchanges and Small Business Health Options Program Exchanges to provide health insurance for low-income individuals and small businesses. The following is a brief description of some of the most important provisions of the health care reform legislation.

    For Individuals

    • U.S. citizens and legal residents will be required to have health insurance by 2014, with some exceptions. Those without insurance will face a tax penalty of as much as 2.5% of taxable income.
    • Existing employer-sponsored health insurance plans will be allowed to remain essentially the same except the plans will be required to extend dependent coverage to qualifying children through age 26, lifetime limits (and eventually, annual dollar limits) on coverage must be eliminated, waiting periods for coverage cannot extend beyond 90 days, and insurers will not be able to deny coverage or charge higher premiums to people based on their health and gender.
    • Medicaid eligibility will be expanded to include individuals under age 65 whose income is less than 133% of the Federal Poverty Level. Note: At this writing, the Federal Poverty Level for a family of four in the continental United States is $22,050.
    • For families with incomes up to 400% of the Federal Poverty Level, tax credits and subsidies will be available to purchase health insurance through state-run exchanges, and to offset out-of-pocket costs.
    • Contributions to a health flexible spending account will be limited to $2,500 per year. Reimbursements from FSAs and HSAs for over-the-counter drugs will be restricted, and tax-free reimbursements from HSAs and Archer MSAs for over-the-counter drugs will not be allowed, while the tax on HSAs and Archer MSAs increases for distributions not used for qualified medical expenses.
    • A rebate of $250 will be available to Medicare Part D (drug coverage) beneficiaries who reach the coverage gap (donut hole) and the coinsurance for costs within this gap are gradually reduced to 25%.
    • Adults with pre-existing conditions will be able to purchase coverage from temporary high-risk pools until 2014, when coverage cannot otherwise be denied for pre-existing conditions.
    • A national program will be established to provide limited reimbursement for long-term care expenses for individuals who participate by contributing to the program’s cost through voluntary payroll deductions.

    For Employers

    • Employers with 50 or more employees that do not offer health insurance coverage will generally have to pay a premium tax of up to $2,000 per full-time employee.
    • Employers with more than 200 employees must automatically enroll employees in health insurance plans from which employees may opt out.
    • Employers providing health insurance must offer a voucher to qualifying employees to purchase health insurance through an exchange.
    • Qualifying employers may receive a tax credit for providing health insurance to employees.

    Tax Changes

    • The threshold for itemized deductions for qualified medical expenses will be increased from 7.5% of adjusted gross income (AGI) to 10% of AGI, though a temporary exception will be maintained for those 65 and older.
    • The tax for Medicare Part A (hospitalization coverage) is increased to 0.9% for individuals with earnings exceeding $200,000, and for couples with joint earnings greater than $250,000. Also, high-income taxpayers will be subject to a surtax of 3.8% on unearned income, such as capital gains, dividends, annuities, and rental income.
    • The law imposes a 10% tax on the amount paid for indoor tanning services.
    • Some of the provisions are effective immediately while others will be implemented over the next several years.