Simply Junior

With the recent changes made to the health care bill, it is estimated that the new legislation will cost a whopping $871 billion over the next 10 years. The new health care plan will be paid for by $483 billion through cuts in spending and another $498 billion will be paid for through new revenue. The Congressional Budget Office claims that the new health care bill will reduce the budget deficit by $130 billion over a period of 10 years.

The legislation will be funded through the individual mandate tax. From 2014, anyone who does not have a qualified health insurance plan will have to pay an income surtax. This tax is expected to earn the federal government $15 billion. The surtax for 2014 is around 0.5 percent. However, in the next two years, it will increase to 1 percent and then to 2 percent the following year.

The federal government will also be levying tax on employers. Employers will 50 or employees will necessarily have to give health insurance to employees, or they will have to a tax of $750 per full time employee. This amount will be non-deductible.

In addition, there will be a 40 percent tax from 2013 on Cadillac health insurance plans. The Cadillac health insurance will have plans for individuals valued at $8,500, while it will be $23,000 for families. However, there will be some exceptions like the Longshoremen, who lobbied to have their union members removed from this new tax.

No longer will the 5 percent tax be levied on cosmetic procedures. However, there will be a 10 percent tax on tanning salons.

Small businesses with less than 25 employees and having an average salary of $50,000 will be given tax credits as an encouragement to get the businesses to offer health insurance to their employees. Small businesses with 10 or less employees can look forward to larger tax credit.

Individuals earning more than $200,000 and married couples earning more than $250,000 will now have to pay increased Medicare payroll tax. The tax is now 0.9 percent instead of the proposed 0.5 percent.

Health insurance companies as well as medical device manufacturers will now have to pay some new taxes. The government has estimated that with these new taxes, it will be able to generate $60 billion over the next 10 years. Companies that are making profit of $50 million or more will now have to pay these new taxes. From 2011, medical device manufacturing industry will have to pay $2 billion every tax year until the end of 2016. Then in 2017, the levy will increase to $3 billion.

In addition, the new health care bill has increased the limit for medical deduction. Currently if a person spends more than 7.5 percent of the adjusted gross income on medical treatment, this amount can be deducted from the taxable income. With the new bill, the limit has been increased to 10 percent of the adjusted gross income.

After what seems like forever, Congress has finally passed a health care reform bill. President Obama’s major goal for the early part of his term seems within reach. The question is, though, what is in this bill? What real changes will people experience as a result of all this wrangling? Or are these all political games with little real impact? Read on for a summary of the actual changes to health care from the new health reform bill.

The most important thing to realize about the reform is that it’s phased in – most of the changes don’t come into play when President Obama signs the bill into law (which is expected to be Tuesday, March 23, 2009). The changes activate over the next decade. Here are the major changes and their impacts.

Health Reform Bill Contents

Before 2011:

* Small businesses get a tax credit to contribute to new health insurance for employees.

* Children cannot be excluded from receiving health insurance from providers due to pre-existing conditions.

* Until the new health insurance exchanges come online in 2014, current uninsured adults with pre-existing conditions will be able to buy subsidized health care coverage.

* Companies can use a temporary health “reinsurance program” to provide benefits for 55-64 year old retirees.

* Being diagnosed with a new illness is no longer grounds for losing your health insurance coverage. Additionally, insurance providers will no longer be able to cap your lifetime health benefits, and their ability to limit annual coverage will be restricted.

* There is currently a Medicare prescription drug loophole between roughly $2700 and $6200 worth of medicine. The reform bill both provides a $250 rebate to Medicare beneficiaries that fall into this loophole and provides for the gap’s closing.

* The age up to which children will be able to use their parents health coverage is raised to 26 up from the previous 19 or college graduation.

* Indoor tanning services with ultraviolet lights will see a 10% tax on their services starting July 1st, 2009

In 2011:

* Large pharmaceutical firms will be taxed additionally based on market share.

* General surgeons and primary care physicians will see a 10% raise in bonus payments.

* Medicare advantage payments are frozen at 2010 levels and will eventually come more into line with traditional Medicare payments.

* States will have a new program to offer in-home care to poor patients who would otherwise require a hospital visit.

* Employees will be able to see the value of their health benefits on their W-2 forms.

* An annual free wellness visit and customized prevention plan analysis will be offered free to all Medicare beneficiaries. Any additional new health care plans will be required to offer such services and their resulting preventive care at little or no cost to Medicare patients.

In 2012:

* At each level, hospital, physician, and Medicare, programs and controls are implemented that reduce readmission rates, improve quality outcomes for patients, and encourage more accountability among healthcare professionals.

In 2013:

* Higher income tax payers (>$200,000 for singles, >$250,000 for joint filings) will have their payroll tax increase from 1.45% to 2.35% as well as pay a 3.8% investment income tax.

* Tax payers can claim medical expenses on itemized tax returns at a 10% rate instead of 7.5%. Elderly tax payers can continue this till 2017.

* Non-public medical device taxes will be additionally taxed at 2.9%.

* The programs begun in 2012 are continued and extended.

In 2014:

* Employers with >50 employees will be fined $2000 for every employee after number 30 if they do not provide employer health insurance.

* Most people will be fined if they do not have health insurance, either through an employer or privately. Tax credits for purchasing health care through an exchange will be offered to those with incomes up to 400% of poverty levels.

* Similar to the 2011 pharmaceutical taxes, in 2014 health insurance companies will be taxed by market share.

* It will no longer be legal to exclude someone from receiving health insurance for having a pre-existing medical condition.

* State-level health insurance exchanges will open, allowing individuals and organizations to shop around for cheaper health insurance.

In 2015:

* Medicare shifts to rewarding quality of care rather than amount of services.

In 2018:

* Higher cost employer health insurance plans (“Cadillac” health insurance) is taxed, with exemptions for the first $27,000 for families and $10000 for individuals.

Many people are of the opinion that self employed people get the short end of the stick when it comes to paying for Social Security, employment tax and health insurance. These are expenses they have to bear on their own whether they like it or not. However, the only silver lining is retirement plans for self employed people.

There are several retirement plans targeting self employed people that allow them to save more money tax deferred for their retirement compared to what most plans offered to employed people by their employers.

Some of the best retirement plans for self employed people are as follows:

Simplified Employee Pension IRA: This is one of the oldest kinds of retirement plans for small businesses. Also known as SEP, the Simplified Employee Pension IRA is much easier to administer compared to a 401k plan. It is also extremely easy to open. All that is required is filling out the proper documents at a bank or broker and the account is opened. The contribution is quite high when compared to a 401k plan and in 2009, a person could contribute up to $49,000. This retirement plan also offers tax-deferred growth for the money and a person has to pay a ten percent penalty on early withdrawals made before reaching the age of 59.5 years. Also, the person would have to pay tax on the withdrawal. However, when the person reaches the age of 70.5 years, he or she has to make annual withdrawals.

Solo 401k: This retirement plan has the same limits for contribution as a traditional 401k plan. However, the Solo 401k plan allows a person to contribute up to 20 percent of their income if they are self employed, or up to 25 percent of their income if they are working for their own corporation. The Solo 401k can be either tax deferred or as a Roth 401k where the contribution is made from taxed monies.

Simple IRA: This retirement plan for self employed people is extremely simple and easy to set up. It is also easy to administer. While this plan has a low limits for contribution, a person can contribute hundred percent of their income. It is ideal for self employed people who have low incomes.

Everyone knows that the commercial construction industry got hammered after the global financial meltdown. And it really hasn’t recovered very well, and although the residential housing market got hit quite a bit harder than the commercial sector, there are plenty of unoccupied buildings with no tenants, unoccupied high-rises, and empty warehouse buildings. The question is, as we are moving into 2011; how does the industry look now?

Is there any money to be made in commercial construction in 2011? Yes and no, and most of the industry believes it will be a rebuilding year. Luckily, Land Costs should remain relatively decent in most US markets. Still, we can expect labor costs to skyrocket – mostly due to increases in illegal immigration enforcement, meaning sub-contractors will be hiring US citizens not cheap labor and paying them under the table. Plus, let’s not forget the realities of the new ObamaCare phase-ins on health insurance.

Many Municipalities and County Governments are requiring LEEDs construction techniques and energy efficient structures. Some states are putting overlay laws on top of local ordinances, building codes, rules, and regulations. That will certainly drive up costs. Also, in some cases Union Labor may often be required because they will be the only folks certified to build LEEDs standard buildings.

But, those are not the only considerations, as you can expect Workmen’s Compensation insurance is only going one-way, and that’s up. And then there are materials, which must be considered in the cost analysis also. Chinese made materials such as aluminum, steel, and other products could be hit with significant tariffs and many building materials from China have already have been due to anti-dumping filings at the WTO.

Yes, 2011 will be a rebuilding year, but it will also be a war zone out there, and it will prove that only the strong survive in this industry. I hope you’ll please consider all that.

For 2011 Federal Tax Return for unemployed, there are a lot tax rebates that are available to lower tax liability.

Here are 3 of the important ones available, so as to help you getting a good value of tax refund from the 2011 Federal taxes:

1. COBRA insurance – It allows unemployed individuals and their families to receive health insurance for up to 18 months after employment is terminated. Before the act, individuals had to pay the full premium, which was generally pretty expensive. With the new act, individuals are only responsible for 35 percent of the premium in 2011 for up to nine months, and the employer is responsible for the other 65 percent.

The employer is then entitled to a payroll income tax credit for that 65 percent. That reduces the tax liability for 2011 Federal income return.

2. Retirement account distributions – Support for many unemployed taxpayers in 2011 is their retirement account. Many of these plans are subject to a 10% penalty on early withdrawals, as well as the distribution being taxable when received. However there are some exceptions, one of them is -

2011 IRA Federal income that are used to pay qualified higher education expenses of the taxpayer, the spouse, or any child or grandchild of the taxpayer or the taxpayer’s spouse.

3. 2011 Job Hunting Expenses – Several Job-hunting expenses like Employment agency fees, job counseling and referral services,classified ads,travel for interviews,costs of resumes,telephone/Internet costs are deductible to the extent they exceed 2% of adjusted gross 2011 Federal income.

These are top 3 tax breaks that should be utilized when filing 2011 Federal Tax return for unemployed.