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February 2011 QuickBooks Tip: Memorizing Transactions
For more QuickBooks training tips, contact Schutte & Hilgendorf, CPAs, a full service accounting firm providing Prescott and the greater Yavapai County with excellent tax, accounting, auditing, bookkeeping and QuickBooks consulting services. We can be reached at 928-778-0079.
The Medicare and Medicaid EHR Incentive Programs will provide incentive payments to eligible professionals, eligible hospitals and critical access hospitals (CAHs) as they adopt, implement, upgrade or demonstrate meaningful use of certified EHR technology. This program, part of the 2009 Economic Stimulus Act, is a $20 million program, with up to $44,000 available for eligible professionals.
From a tax perspective, this means that eliglible medical professionals receiving these incentives may be taxed on this extra income in the form of bonus Medicare and Medicaid payments.
With bonus and 179 depreciation programs in effect for 2011, you may be able to deduct the entire purchase of hardware and software necessary to implement these mandated programs, thus offsetting the increased taxable income provided by the incentive payments.
Eligible medical professional should act quick! Incentives are only available from 2011 – 2014 and will be phased out completely by 2015 with EHR being mandated!
For more information about the Medicare and Medicaid EHR Incentive Program, visit http://www.cms.gov/EHRIncentivePrograms.com
For more information on the tax implications of this incentive program and how to take advantage of tax saving opportunities, contact Schutte & Hilgendorf, CPAs, a prescott accounting firm providing tax planning, preparation, audit, accounting and QuickBooks consulting to the greater Yavapai County area. Phone: 928-778-0079 or website: www.prescottaccountants.com
|From the eTax Alert™ February 11, 2011, Western CPE
IRS Changes Its Mind on Medicare Premiums as Self-Employed Health Insurance
With no notice, the IRS changed the wording in its 2010 Form 1040 Instructions. The instructions now say that Medicare B premiums can be used to figure the self-employed health insurance deduction. The 2009 instructions and Publication 535 said that they didn’t qualify.
Example: Mary is a 67-year-old, self-employed real estate broker. Because she’s a high income individual and is means tested for Medicare B, Mary pays $4,243 for her 2010 Medicare coverage. Mary also pays $1,200 for Medigap health insurance and $2,900 for long-term care insurance. If she’s otherwise qualified, Mary can claim a self-employed health insurance deduction of $8,343. For 2010 only, this amount also reduces her self-employment income for SE tax purposes.
© Vern Hoven & Sharon Kreider
If you have additional questions related to healthcare deductions or other tax preparation or tax planning questions, contact Schutte & Hilgendorf , CPAs, a prescott accounting firm providing audit, tax and accounting to Yavapai County and beyond.
Written and originally published by the Arizona Department of Revenue,
Changes to Arizona Withholding for Wages Paid After December 31, 2010.
The Department prescribed new withholding tables in early 2010 in accordance with Senate Bill 1185 (Laws 2009, 1st Reg. Session, Chapter 2). The new tables were effective for wages paid after June 30, 2010.
The new withholding tables are based on a percentage of gross taxable wages. “Gross taxable wages” is the amount that meets the federal definition of “wages” contained in IRC § 3401 and that will generally be included in box 1 of the employee’s federal Form W-2 at the end of the calendar year (i.e. gross wages net of pretax deductions, such as the employee’s portion of health insurance premiums).
Each employee subject to Arizona income tax withholding was required to complete a new Arizona Form A-4.
The Department has revised Arizona Form A-4 effective for wages paid after December 31, 2010.
The changes include:
■Providing an additional withholding percentage of 0.8%. Previously available percentages are unchanged.
■Removal of the $15,000 annual compensation threshold. All seven withholding percentage rates are available to all employees, regardless of annual compensation.
■Relaxing the exemption requirements. The employee only has to expect that there will be no Arizona tax liability in the current taxable year (instead of not having a liability in the prior year and not expecting one in the current year). However, this withholding exemption election will need to be renewed annually, similar to federal requirements.
Unlike the previous changes effective July 1, every employee is not required to complete a new Arizona Form A-4. Employees wanting to renew their withholding exemption are required file a new Form A-4 with their employer. Employees wanting to take advantage of the lower withholding percentage must file a new Form A-4 with their employer. Individuals with a current withholding percentage elected on Arizona Form A-4P or Arizona Form A-4V may also file a new form to take advantage of the new withholding percentage.
Withholding percentage options for wages paid after December 31, 2010.
Rates are a percentage of gross taxable wages.
The 2011 Arizona Form A-4, Arizona Form A-4P, and Arizona Form A-4V are available on the
Department’s website at http://www.azdor.gov/Forms/Withholding.aspx
Arizona Withholding Tax Basics For Arizona purposes, an employer must withhold Arizona income tax from the payment of wages to an employee whose compensation is for services performed in Arizona.
Arizona income tax withholding is a percentage of the employee’s gross taxable wages.
“Gross taxable wages” is the amount that meets the federal definition of “wages” contained in IRC § 3401 and that will be included in box 1 of the employee’s federal Form W-2 at the end of the calendar year (i.e. gross wages net of pretax deductions, such as the employee’s portion of health insurance premiums). Employees may also have their employer withhold an additional amount.
The employee completes Arizona Form A-4, Employee’s Arizona Withholding Percentage Election, to elect an Arizona withholding percentage. Amounts that are considered wages for federal tax purposes are also considered wages for Arizona income tax and withholding purposes.
Amounts that are included in wages and are subject to mandatory federal withholding are subject to mandatory Arizona withholding. Amounts that are excluded from wages and are excluded from mandatory federal withholding are excluded from mandatory Arizona withholding.
An employer must withhold Arizona tax from wages paid for services performed within Arizona regardless of whether the employee is a resident or nonresident of Arizona. However, there are two exceptions to the general mandatory withholding requirements for nonresident employees temporarily performing services for their employer in Arizona. Although a nonresident employee may be exempt from Arizona income tax withholding, the employee may be required to file a nonresident Arizona income tax return if the employee meets the filing requirement.
An employer may not have to withhold Arizona tax from wages paid to a nonresident performing services in Arizona if:
■The employee is physically present in Arizona for less than 60 days in a calendar year for the purpose of performing a service that will benefit the employer; AND
■The employer is an individual, fiduciary, partnership, corporation or limited liability company having property, payroll and sales in Arizona, or of a related entity having more than 50% direct or indirect common ownership.
An explanation of this exemption (including examples) is included in the Employer’s Instructions for the Arizona Form A-4.
If you need more information about the article above, contact Schutte & Hilgendorf, CPAs serving all of Yavapai County with accounting, tax preparation and planning, auditing, bookkeeping, payroll, and QuickBooks consulting.
IR-2011-7, Jan. 20, 2011
WASHINGTON — The Internal Revenue Service plans a Feb. 14 start date for processing tax returns delayed by last month’s tax law changes. The IRS reminded taxpayers affected by the delay they can begin preparing their tax returns immediately because many software providers are ready now to accept these returns.
Beginning Feb. 14, the IRS will start processing both paper and e-filed returns claiming itemized deductions on Schedule A, the higher education tuition and fees deduction on Form 8917 and the educator expenses deduction. Based on filings last year, about nine million tax returns claimed any of these deductions on returns received by the IRS before Feb. 14.
People using e-file for these delayed forms can get a head start because many major software providers have announced they will accept these impacted returns immediately. The software providers will hold onto the returns and then electronically submit them after the IRS systems open on Feb. 14 for the delayed forms.
Taxpayers using commercial software can check with their providers for specific instructions. Those who use a paid tax preparer should check with their preparer, who also may be holding returns until the updates are complete.
Most other returns, including those claiming the Earned Income Tax Credit (EITC), education tax credits, child tax credit and other popular tax breaks, can be filed as normal, immediately.
The IRS needed the extra time to update its systems to accommodate the tax law changes without disrupting other operations tied to the filing season. The delay followed the Dec. 17 enactment of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, which extended a number of expiring provisions including the state and local sales tax deduction, higher education tuition and fees deduction and educator expenses deduction.
If you need assistance with your tax filings, contact Schutte & Hilgendorf, CPAs, serving all of Yavapai County with accounting and tax services.