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New Reporting Requirements Under Recent Federal Tax Legislation Recent legislation has added reporting requirements for business owners that have not been widely publicized. A few of our clients have been asking about these after reading articles published on-line or in financial publications. The good news is these rules do not affect 2010 filings. Form 1099-K: Created in the "Housing Assistance Tax Act", this new form will report income received by businesses in the form of credit card payments. Form 1099-K will be issued to merchants who have at least 200 transactions per year totaling more than $20,000. The form will be issued by the payment processors. No additional recordkeeping is required on the part of the business owner. This provision takes effect in 2011.
Form 1099-Misc: Under current law, business owners issue Forms 1099-MISC to unincorporated service providers to whom they pay at least $600 in a calendar year. Beginning in 2012, the requirement is expanded to include payments made to corporations and payments for the purchase of goods as well as services. The filing threshold remains at $600 per vendor per year. Business owners will need to be diligent in collecting the Social Security Number or Employer Identification Number of each provider of goods and services. As the implementation dates for these provisions get closer, we will be reminding our clients to develop systems for collecting the required information. Highlights of Federal Health Care Reform Legislation Employers with 25 or fewer employees will be entitled to a tax credit for some of the cost of health insurance they provide for employees (effective NOW). Employers will be exempt from their share of Social Security (but not Medicare) tax for qualified employees hired between March 18, 2010 through December 31, 2010. If the employee remains for a year, the employer may qualify for a tax credit (Effective NOW). Young adults will be able to remain on their parents' health insurance plan until age 26 (effective in 2010). "High income" taxpayers will pay more medicare tax (effective in 2013). The floor for itemized deductions for medical expenses will be raised from 7.5% of adjusted gross income to 10% (2013). "High income" taxpayers will pay higher tax on investment income (effective in 2013). Employers with 50 or more employees will be required to provide a minimum level of health insurance (effective in 2014). Most individuals will be required to obtain health insurance (effective in 2014). Conclusion: If you are not currently using a payroll service, it's time to engage one. Connect to ADP, Paychex or AmCheck on our "LINKS" page. Call us! Secure file transfer link: Sign up at the link below, so you can send and receive data. Large files, such as QuickBooks, move so much faster through this link, and all transfers are more secure than ordinary email. News from our officeThank you, David Everett and Rick Patrick, for displaying beautiful photos, woodcuts & pencil drawings in our office during tax season. The art gave us an occasional break from tax returns, and it gave our guests an opportunity to view the work of our very talented clients. Look for new pictures of Texas state parks & natural areas by John Margaglione (www.spicewoodphotography.com) which will be displayed in our office during June & July. These pictures will make you want to head out of town. CPAs are part of your business planning team. We have recently visited with several clients and their health insurance professionals to brainstorm arrangements for the best coverage at the most reasonable cost. Call us if you are considering changing your entity, your employment arrangement, or your health care coverage. Depend On Us!You can depend on Bargsley, Andrews & Steinbach for all your accounting needs.
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