Simply Junior

It is the season of Income Tax Returns, collection of Form 16, Form 16A and other details from your employers, banks, companies and from many other institutions and organizations where you have invested your money and the investment qualifies for deduction of tax at source. In the world of online transactions, Income Tax Department has initiated some extraordinarily good steps for the common taxpayers like I and you. Apart from filing online tax returns, you can now verify the details of tax credits, TDS, tax refunds and other important details online through the website of Income tax Department.

What are the benefits of verifying tax credits online?

It enables you to ascertain the correctness of TDS and TCS claims in the Tax Returns filed by you with the Income tax Department. You can verify TDS and TCS reported by the tax Deductors and Collectors and in case if the data does not match, you can take up the matter pertaining to any deficiencies or mismatches with your Deductor or Collector so that the corrective action can be taken by them by filing an updated E-TDS return with NSDL with your correct PAN or TDS amount. For instance, I had recently come across a case of mismatch in TDS data for my Term Deposit with a nationalized bank. The bank was issuing me TDS Form 16A since last three years but the data was not uploaded due to some technical problems. I would never have come to know about the mismatch if I were not to verify the online data about tax credit. Mistakes can happen at your end as well especially in respect of the PAN and TAN. In such cases, you can identify claims made by you using invalid TAN. In all cases where TAN is invalid the “Name of the Deductor” is mentioned as “INVALID TAN” and in all such cases no match is possible. The TAN in these cases would have to rectified by you by filing a revised Return of Income with correct TAN. You can also see the details of Tax Refunds sent to you by the Income Tax Department How to verify tax credits online?

The entire process is very simple. Here is the step-by-step procedure.

Open the website of Income Tax Department E-Filing

Click on the Link “New User Register” Enter your PAN and Press ‘Click Me” button. Next, you will come across a page asking you to enter your date of birth, email id and password. This completes the registration procedure. Remember your password. Your login id is your PAN. Once you have successfully registered on the Income Tax site, you can go back to home page and login. On successful login, you will see a page with various options on the top. On the right top side, you will see “My Account”, under which you will find several options. Now, click on’View Tax Credit Statement (Form 26AS) and fill in all the details such as Assessment Year, Date of Birth and the CAPTCHA code and submit. Next, press confirm and you will be taken to another website and webpage, which will show you Form 26AS containing all the details of Tax Credit such as TDS, TCS and Tax Refund Summing Up:

With the easy access to online tax returns and user-friendly website of Income Tax Department, it has become extremely simple to file your returns electronically and to check your tax credits and tax refunds online. You may visit Financial Awareness Portal for a detailed procedure with screenshots

Well, for better or worse, the healthcare bill has been signed into law. There is no immediate benefit in being angry. There are a number of legal actions started by various Attorneys General alleging that the reforms are unconstitutional. Even if some of these cases succeed on the issue of mandatory insurance for private individuals, this will not necessarily strike down the whole bill. The likelihood is we will be left with all the provisions dealing with small businesses. Keeping it real, we have to start planning for the future on the law as it is. The good news is that the main raft of provisions will not become active until 2014. This gives the lawmakers plenty of time to have second thoughts. Just as important, there are sets of regulations to be written clarifying the detail of how some of the new features are to work at state level. However, this is an outline of what we can expect.

The states are to establish SHOP exchanges where small businesses can group together and buy insurance. For these purposes, until 2016, a business is considered small when it has no more than 50 employees, with states having the option of increasing the limit to 100 employees. To calculate numbers, you pro-rate the full- and part-time employees. Independent analysts predict group premiums will drop no more than 4%, while the value of the cover will rise by up to 3%. To bridge until the exchanges are operating, a tax credit system will come into force. If your business has less than ten employees with an average annual pay of less than $25,000, the credit is 35% of the health plan cost. There are partial credits where the number of employees is less than 25 and their average annual pay is less than $50,000. When the exchanges start, the credit increases to 50% for the first two years.

With immediate effect, there are a ban on terms designed to cap the value of claims, and limits on the right of insurers to cancel policies except in cases where actual fraud can be proved. As from 2014, the insurers must accept all employees without regard to pre-existing conditions. Their calculation of premium rates can only be based on location, age and whether an individual smokes. As from 2014, small businesses with more than 50 employees will be required to provide a health plan or pay an annual penalty of $750 for every full-time employee denied cover. This can rise to $2,000 if coverage is still denied.

So, tomorrow, you will be going out into the same market as before the reform bill became law. Finding cost-effective small business insurance will continue to be a struggle. Indeed, many insurers may increase premiums now so that, when the SHOP exchanges do come into force, they have a margin to play with to deal with the competition. However, when you buy, check that the new terms on the total value claimable and restrictions on the right to cancel have been introduced. If you buy your small business insurance through an agent, ask direct questions. It saves time fighting over whether wording is unlawful later on.

The recently enacted HIRE Act of 2010 is intended to offer tax incentives to employers who hire eligible employees by offering payroll tax credits. Overall, the HIRE Act is straight- forward and determining who is an eligible employee is not overly difficult.

Under the HIRE Act, employers can receive a payroll exemption of their 6.2% share of social security tax on all wages paid to qualified employees, exempting the employer from their share of Social Security taxes on 2010 wages paid to these workers after March 18, 2010. Employers are still liable for Medicare tax on all wages. In addition to the 6.2% savings, businesses who retain a qualified employee for a 52 consecutive week period can qualify for a tax credit of up to $1,000 provided the employee’s pay does not decrease significantly in the second half of the year. The employer may claim the new hire retention credit on their 2011 income tax return.

What employees are eligible for the HIRE Act?

The basic instructions, as explained on IRS Form W-11 are as follows. Employee must begin employment after February 3, 2010 and before January 1, 2011. An eligible employee has not been employed for more than 40 hours during the 60-day period ending on the date the employee begins work with employer. The employee must sign a W-11, or similar affidavit to be eligible. An employee is not eligible if he/she replaces a fired employee, but is eligible if filling a voluntarily vacated position, or as a result to downsizing. Employees who are also not eligible for the HIRE Act are any persons related to the employer, or a relative or dependent of anyone who owns more than 50% of outstanding stock or capital of a business. The HIRE Act does not apply to household employees.

Who is an eligible employer for the HIRE Act?

Businesses, agricultural employers, tax-exempt organizations, temp agencies, employees in U.S territories and public colleges and universities all qualify to claim the payroll tax benefit for eligible newly hired employees. The HIRE Act also applies to brand new businesses. A business that lays off workers due to lack of work and hires new staff when business improves may qualify. The hire act even applies to employees who are laid off and rehired for the same position, and employees hired from a temp agency if the temp agency has not claimed said employees wages.

For an employee to be eligible he/she does not need work a minimum amount of hours or for a set period. Of course, to receive the general tax credit the employee must be employed for 1 year. Employers may claim the Cobra Premium Assistance Credit and the Payroll Tax Exemption for new hires on the same employment tax return.

As you can see, the requirements for the HIRE Act are not overly stringent or difficult to meet. The W-11 Affidavit is currently available on the IRS official website as well as additional information regarding more specific tax questions. Enrolled agents, CPA’s and other registered tax preparers should be aware of this opportunity to help clients save money under the Hire Act. These new rules cannot show up on the enrolled agent exam until the 2011 testing period, so if you are a prospective enrolled agentcurrently studying for the 2010 EA exam, you will not need to know these rules. The 2011-2012 enrolled agent course will cover this new law.