TAX INFO FOR EMPLOYEES

Tax time is here and as you prepare your return or plan for your tax whithholdings for 2010, we've provided a couple of resources that would be a great benefit for those that qualify.

IRS FREE TAX FILING

If possible, take advantage of the IRS free tax filing. The IRS and its private-sector partners are again making Free File available for the 2010 tax season (for 2009 income). Eligible taxpayers receive free use of helpful tax preparation software and free electronic filing of their federal tax returns. Free File can make it easier for employees to find all the credits and deductions they are due. Taxpayers go through www.IRS.gov/freefile to access the free options.

EARNED INCOME TAX CREDIT


Some taxpayers are overlooking a valuable tax credit that could make their lives a little easier. The IRS estimates that up to one in four taxpayers who qualify for the Earned Income Tax Credit – or EITC – fail to claim the credit.

You may qualify if your income was under $41,646 last year and you, or your spouse, had income from wages, self-employment, farming, or, if under the minimum retirement age, from disability retirement benefits paid under an employer plan. The amount of your EITC could be as much as $4,824 or as little as $1 and depends on several factors, such as how much you earned, your filing status, whether you have children, etc.

To get the EITC you earned, you must 1) file a federal income tax return and 2) claim the EITC.

You may prefer to get some of next year’s EITC throughout the year, rather than wait and get EITC after you file your tax return. To get EITC, complete Form W-5 and give the lower part of the form to us. Keep the top part for your records. For more information, see Advance EITC Questions and Answers.

Many communities have volunteer income tax assistance sites or local IRS Taxpayer Assistance Centers, which will compute your EITC and prepare your return without charge. To locate a volunteer site, call your community’s 211 or 311 number for local services or call the IRS at 1-800-906-9887. Locate an IRS Taxpayer Assistance Center in the blue pages of your telephone directory.

Find more information at www.irs.gov/EITC . The online EITC Assistant can help you determine your eligibility and the amount of your credit.

HEALTH CARE REFORM

There is still much to be decided or that may change, but at this point, below is a summary of some changes to expect if the Senate passes the House's changes and President Barack Obama signs the entire package into law:

Within the first year:

• Insurers will be barred from excluding children for coverage because of pre-existing conditions.
  Young adults will be able to stay on their parents' health plans until the age of 26. Many health plans currently drop dependents from coverage when they turn 19 or finish college.
  


• Uninsured adults with pre-existing conditions will be able to obtain health coverage through a new program that will expire once new insurance exchanges begin operating in 2014.
  


• A temporary reinsurance program is created to help companies maintain health coverage for early retirees between the ages of 55 and 64. This also expires in 2014.
  


• Medicare drug beneficiaries who fall into the "doughnut hole" coverage gap will get a $250 rebate. The bill eventually closes that gap which currently begins after $2,700 is spent on drugs. Coverage starts again after $6,154 is spent.
  


• A tax credit becomes available for some small businesses to help provide coverage for workers.

In 2011:

• New health plans will be required to cover preventive services with little or no cost to patients.
  


• Employers are required to disclose the value of health benefits on employees' W-2 IRS forms.

In 2014:

• State health insurance exchanges for small businesses and individuals open.
  


• Most people will be required to obtain health insurance coverage or pay a fine if they don't.


• Healthcare tax credits become available to help people with incomes up to 400 per cent of poverty purchase coverage on the exchange.
  


• Health plans no longer can exclude people from coverage due to pre-existing conditions.
  Employers with 50 or more workers who do not offer coverage face a fine of $2,000 for each employee if any worker receives subsidized insurance on the exchange. The first 30 employees aren't counted for the fine.
  


• Health insurance companies begin paying a fee based on their market share.

In 2018:

• An excise tax on high cost employer-provided plans is imposed. The first $27,500 of a family plan and $10,200 for individual coverage is exempt from the tax. Higher levels are set for plans covering retirees and people in high risk professions.