Here are a few notes on the federal COBRA Premium assistance program under the American Recovery and Reinvestment Act.

• Eligible workers pay 35 percent of the premium to their former employers.
• The employer receives a payroll tax credit on form 941/944 for the other 65%.
• To qualify you must have been involuntarily separated from your job between Sept. 1, 2008, and May 31, 2010.
• This subsidy is reduced if your filing status is single and your modified adjusted gross income exceeds $125,000 ($250,000 if you file a joint return). If your modified adjusted gross income exceeds $145,000 ($290,000 for joint filers), you do not qualify for the subsidy.
• For assistance-eligible individuals, the qualifying event must occur on or before March 31, 2010, and the COBRA subsidy may apply for up to nine months. (03/1710)
• An employer may reduce its payroll tax deposits during a quarter by the amount of subsidy provided during the quarter. However, in all cases, credit for the subsidy must be claimed on the employer’s payroll tax return.

More info can be found here.

Mark your calendar, because in a few weeks you will be free from NC's sales tax, even if it is only on certain items, and only for a few days.

When: August 6-8, 2010
What Qualifies: Clothing, footwear, and school supplies of $100 or less per item; school instructional materials of $300 or less per item; sports and recreational equipment of $50 or less per item; computers of $3,500 or less per item; and computer supplies of $250 or less per item will be exempt from sales tax.

Source

Maybe you have received the email or heard the rumor going around that the new health care law is going to make your employer provided health care benefits a taxable benefit in the future. I know I have personally heard this rumor many times from different clients or acquaintances.

Well fortunately it is FALSE. The new health care law does require that your tax free benefits be printed on your W-2, but it is for informational purposes only, and not as additional income. It would be similar to the way your employer reports the retirement contributions on your W-2. It's purpose is twofold (as far as I can tell).

1. It proves to the IRS that you are covered under a health plan, and that you are not subject to the penalties that are assessed against the uninsured.

2. It proves to the IRS the value of your employer benefits, becuase insurance companies that provide high dollar "Cadillac Plans" will have to pay a tax beginning in 2018 on those plans. Note the insurance company pays the tax, not the employee (but don't kid yourself if you don't think that cost won't get passed on to the customer).

So the good news is that this benefit will continue to be a tax free benefit (as long as employers can afford to provide it). The bad news is that employers and payroll preparers will have a new task each year as they prepare the W-2 forms.

Link

By now you have probably heard that the new health care act passed by Congress will require businesses to send a multitude of new 1099's that they were not required to send in the past. Exemptions for corporations and suppliers under the old law have been removed beginning in 2012.

One congressman has seen the potential mountain of paperwork and burden this is going to create for taxpayers as well as the IRS who has to process all this info. He is introducing a bill that will repeal the 1099 mandate and restore the old rules. I think this is a bill that everyone can get behind.

If you have a binding contract on a home but weren't able to close by the June 30th deadline, you are in luck. Congress extended the Homebuyer credit deadline to September 30th. More details can be found here or at irs.gov

Due to the expiration of the tax law that made Coverdale/Education IRA's a tax free college savings vehicle, in 2011 the earnings that are withdrawn from that account will be taxable. You would think that congress would have a more long term horizon for college funding options, but this really shows a lack of planning and foresight. I always preferred the Coverdale over the 529 becuase it was more flexible in allowing you to use it towards expenses at a private elementary, middle, or high school, not just college. This will be the death of the Coverdale account though.

So if you are one of those who tried to do the right thing and fund your kid's college education, you do have a few options before the end of the year:

• Spend the money on qualified expenses (tuition and fees to college or K-12, new computer, internet access)
• Roll the Coverdell money into a 529 savings plan, penalty-free, as long as the accounts have the same beneficiary.

If you don't act then the earnings from the account will be taxable when you withdraw them, and you could face a 10% penalty if the earnings aren't used for college expenses.

Source

Here is an excellent website with a description of the many penalties the IRS may levy against a taxpayer, as well as a list of the possible ways you might be able to get the IRS to abate (forgive) those penalties.