Vision Payroll

Due to the severe storms, flooding, straight-line winds and tornadoes in Tennessee beginning April 30, 2010, President Barack Obama declared the following counties a federal disaster area: Benton, Cannon, Carroll, Cheatham, Chester, Clay, Crockett, Davidson, Decatur, DeKalb, Dickson, Dyer, Fayette, Gibson, Giles, Hardeman, Hardin, Haywood, Henderson, Hickman, Houston, Humphreys, Jackson, Lauderdale, Lawrence, Lewis, Macon, Madison, Marshall, Maury, McNairy, Montgomery, Obion, Perry, Putnam, Robertson, Rutherford, Shelby, Smith, Stewart, Sumner, Tipton, Trousdale, Wayne, Williamson and Wilson. Therefore, the Internal Revenue Service (IRS) announced recently that it will waive failure to deposit penalties for employment and excise taxes due after April 29, 2010 and before May 18, 2010 as long as the deposits are made by May 17, 2010. In addition, affected taxpayers will have until June 29, 2010 to file most tax returns. Contact Vision Payroll if you were affected by the severe storms, flooding, straight-line winds and tornadoes and need further information on the relief provided by the IRS.

Due to the severe storms, tornadoes, straight-line winds, and flooding in Alabama beginning April 24, 2010, President Barack Obama declared the following counties a federal disaster area: DeKalb, Marshall and Walker. Therefore, the Internal Revenue Service (IRS) announced recently that it will waive failure to deposit penalties for employment and excise taxes due after April 23, 2010 and before May 11, 2010 as long as the deposits are made by May 10, 2010. In addition, affected taxpayers will have until June 23, 2010 to file most tax returns. Contact Vision Payroll if you were affected by the severe storms, tornadoes, straight-line winds, and flooding and need further information on the relief provided by the IRS.

Due to the severe storms, tornadoes and flooding in Mississippi beginning April 23, 2010, President Barack Obama declared the following counties a federal disaster area: Attala, Choctaw, Holmes, Monroe, Oktibbeha, Union, Warren, and Yazoo. Therefore, the Internal Revenue Service (IRS) announced recently that it will waive failure to deposit penalties for employment and excise taxes due after April 22, 2010 and before May 11, 2010 as long as the deposits are made by May 10, 2010. In addition, affected taxpayers will have until June 22, 2010 to file most tax returns. Contact Vision Payroll if you were affected by the severe storms, tornadoes and flooding and need further information on the relief provided by the IRS.

Nonfarm payroll employment rose by 290,000 in April, the unemployment rate edged up to 9.9%, and the labor force increased sharply, the US Bureau of Labor Statistics reported recently. Job gains occurred in manufacturing, professional and business services, health care, and leisure and hospitality. Federal government employment also rose, reflecting continued hiring of temporary workers for Census 2010.

In April, the number of unemployed persons was 15.3 million, and the unemployment rate edged up to 9.9%. The rate had been 9.7% for the first 3 months of this year.

Among the major worker groups, the unemployment rate for whites (9.0%) edged up in April, while the rates for adult men (10.1%), adult women (8.2%), teenagers (25.4%), blacks (16.5%), and Hispanics (12.5%) showed little or no change. The jobless rate for Asians was 6.8%, not seasonally adjusted.

The number of long-term unemployed (those jobless for 27 weeks and over) continued to trend up over the month, reaching 6.7 million. In April, 45.9%of unemployed persons had been jobless for 27 weeks or more.

Among the unemployed, the number of reentrants to the labor force rose by 195,000 over the month.

In April, the civilian labor force participation rate increased by 0.3 percentage points to 65.2%, as the size of the labor force rose by 805,000. Since December, the participation rate has increased by 0.6 percentage points. The employment-population ratio rose to 58.8% over the month and has increased by 0.6 percentage points since December.

The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) was about unchanged at 9.2 million in April. These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job.

About 2.4 million persons were marginally attached to the labor force in April, compared with 2.1 million a year earlier. (The data are not seasonally adjusted.) These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey.

Among the marginally attached, there were 1.2 million discouraged workers in April, up by 457,000 from a year earlier. (The data are not seasonally adjusted.) Discouraged workers are persons not currently looking for work because they believe no jobs are available for them. The remaining 1.2 million persons marginally attached to the labor force had not searched for work in the 4 weeks preceding the survey for reasons such as school attendance or family responsibilities.

This week’s question comes from Kim, an HR director. We have employees who maintain coverage on their health insurance policy for children, including some children who are not dependents. We have always included the cost of this coverage in our employees’ income. How does health care reform affect the taxation of children’s health insurance coverage? Answer: Generally, the Affordable Care Act allows the cost of coverage for children who are under age twenty-seven at the end of the year to be tax-free to employees. Additionally, employees may make pre-tax contributions to cafeteria or §125 plans for children who will be under age twenty-seven at the end of the tax year. These benefits are available even if the child qualifies as a dependent under the tax law. The Internal Revenue Service (IRS) recently issued Notice 2010-38, Tax Treatment of Health Care Benefits Provided With Respect to Children Under Age 27, to explain these changes and provide further guidance to employers, employees, health insurers and other interested taxpayers. Contact Vision Payroll if you have further questions on Notice 2010-38.

According to the US Department of Labor, in the week ending May 1, the advance figure for seasonally adjusted initial claims was 444,000, a decrease of 7,000 from the previous week’s revised figure of 451,000. The 4-week moving average was 458,500, a decrease of 4,750 from the previous week’s revised average of 463,250.

The advance seasonally adjusted insured unemployment rate was 3.6% for the week ending April 24, unchanged from the prior week’s unrevised rate of 3.6%.

The advance number for seasonally adjusted insured unemployment during the week ending April 24 was 4,594,000, a decrease of 59,000 from the preceding week’s revised level of 4,653,000. The 4-week moving average was 4,649,000, an increase of 8,000 from the preceding week’s revised average of 4,641,000.

The fiscal year-to-date average of seasonally adjusted weekly insured unemployment, which corresponds to the appropriated AWIU trigger, was 5.183 million.

In Rev. Rul. 2010-13, Average Premium for Small Group Market for Determining the Small Employer Health Insurance Credit, the Internal Revenue Service (IRS) and the Department of Health and Human Services (HHS) released the chart containing the small group market in each state for the 2010 taxable year. Under the health care reform, employers are allowed a credit in certain situations if they pay a portion of their employees’ health insurance premiums. The credit is limited to the lesser of:

1. The amount of nonelective contributions paid by the eligible small employer on behalf of employees under the arrangement during the taxable year, and
2. The amount of nonelective contributions the employer would have paid under the arrangement if each such employee were enrolled in a plan that had a premium equal to the average premium for the small group market in the state (or in an area in the state) in which the employer is offering health insurance coverage.

The State of Idaho had the lowest rates at $4,215 for employee-only coverage and $9,365 for family coverage while the Commonwealth of Massachusetts had the highest rates at $5,700 and $14,138, respectively. Family coverage includes any coverage other than employee-only (or single) coverage.

According to Rev. Rul. 2010-13:

HHS recognizes that there may be areas in some States with meaningfully higher premium rates. For the 2010 taxable year, HHS may provide additional average premium rates for the small group market in certain areas within States. However, in no case will any such additional sub-State rates be lower than the applicable rate for each State that is set forth in this Revenue Ruling.

Contact Vision Payroll for further information on the average premium for the small group markets during 2010.

The new health reform law gives a tax credit to certain small employers that provide health care coverage to their employees, effective with tax years beginning in 2010. Over the next several weeks, Vision Payroll will be providing further information on the Small Business Health Care Tax Credit. Today’s topic is Employers in a Controlled Group or an Affiliated Service Group.

The aggregation rules of §414(b), (c), (m), and (o) apply so that controlled groups of corporation, businesses under common control, and affiliated service groups will be treated as a single employer for this purpose. Therefore, all employees of the controlled group or affiliated service group, and all wages paid to employees by the controlled group or affiliated service group, are counted in determining whether any member of the controlled group or affiliated service group is a qualified employer.

The next topic to be covered in this series is Claiming the Small Business Health Care Tax Credit. Contact Vision Payroll if you have further questions on Employers in a Controlled Group or an Affiliated Service Group.

The new health reform law gives a tax credit to certain small employers that provide health care coverage to their employees, effective with tax years beginning in 2010. Over the next several weeks, Vision Payroll will be providing further information on the Small Business Health Care Tax Credit. Today’s topic is the Impact of Owners and Relatives.

Most owners and their relatives and not counted for either the calculation of full-time equivalent employees or average annual wages. The following are excluded from both calculations:

• Sole-proprietors
• Partners
• 2% S corporation shareholders
• 5% owners within the meaning of §416
• Family members or dependents of any one of these first four groups of individuals

For this purpose, a family member is defined as a child (or descendant of a child); a sibling or step-sibling; a parent (or ancestor of a parent); a step-parent; a niece or nephew; an aunt or uncle; or a son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law or sister-in-law.

The next topic to be covered in this series is Employers in a Controlled Group or an Affiliated Service Group. Contact Vision Payroll if you have further questions on the Impact of Owners and Relatives.

The new health reform law gives a tax credit to certain small employers that provide health care coverage to their employees, effective with tax years beginning in 2010. Over the next several weeks, Vision Payroll will be providing further information on the Small Business Health Care Tax Credit. Today’s topic is the Impact of Seasonal Employees.

Seasonal employees who do not work for the employer more than 120 days during the taxable year are excluded in the calculation of full-time equivalent employees. Seasonal employees in this sense are seasonal employees as defined by the Secretary of Labor and retail workers employed exclusively during holiday seasons. Any time worked on a calendar day is counted as a day of work.

The next topic to be covered in this series is the Impact of Owners and Relatives. Contact Vision Payroll if you have further questions on the Impact of Seasonal Employees.