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Celebrating
our 25th Anniversary
Can your kids also be your employees?
If you own a business, the most effective way to shift income to your
kids is to hire them. You can deduct your kids’ wages as a business
expense and, if they’re under age 18 and your company is unincorporated,
you won’t have to pay Social Security, Medicare or unemployment taxes.
Your kids are entitled to a standard deduction — currently $5,150 —
which means their first $5,150 in earned income is tax free. The kiddie
tax isn’t an issue because it applies only to unearned income. Keep in
mind that wages should be for a bona fide job and comparable to market
rates. If you’re paying too much, you could lose the deduction.
More health care cost-saving
strategies for employers
Along with Health Savings Accounts (HSAs), you have other options for
keeping your health care costs under control. For example, by making
some simple benefit changes to your traditional managed care or other
health plan, your employees will have more financial incentive to
control their health care costs. Here are some strategies you may want
to consider:
Increase co-insurance. Instead of using fixed dollar
co-pays for office visits, hospitalization and other services, replace
them or supplement them with 10% or 20% co-insurance amounts that the
employee will be liable for.
Provide a tiered benefit for pharmaceuticals. Patients
should have the least out-of-pocket exposure for generic drugs, followed
by a somewhat higher amount for formulary drugs. Formularies are lists
of approved name-brand drugs put together by health plan pharmacists and
medical directors based on cost and efficacy when no generic equivalent
is available. Patient cost should be the highest for nonformulary
medications.
Select tiered cost provider
networks. With these plans employees pay a larger portion of the
monthly premium if they choose one of the higher cost physician and
hospital group alternatives.
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Why Dec. 31 should be your
personal tax deadline
Some tax-saving strategies must be implemented before
year endMost
people spend a significant portion of their earnings on
income taxes — often more than any other single expense. Yet
it’s not unusual for them to put more effort into getting
the best price on a new car than into reducing their tax
bills. One possible reason for this is that employer
withholding and estimated payments take some of the sting
out of the April 16 tax payment deadline. But just because
you don’t have to send a payment to the IRS next April
doesn’t mean you shouldn’t take advantage of opportunities
to save. This article explains why you need to gaze into
your crystal ball and estimate your income, deductions and
tax liabilities for both this year and next, as well as
reviewing your investments and the Tax Increase Prevention
and Reconciliation Act of 2005 (TIPRA).
Read more
Tax tips
Watch out for business use of “listed” property
This section presents brief
notes on business use of “listed” property, deducting
investment expenses, prepaying tuition to reduce estate
taxes, and tax scams.
Read more
Is Internet sales tax in
your future?
In 2005, state and local
governments lost $18 billion in uncollected sales taxes on
Internet purchases. Moreover, some states are projected to
lose up to 10% of their total sales tax revenues due to
e-commerce. That’s a dire prediction considering that sales
taxes account for one-third of all state revenues. Enter the
Streamlined Sales and Use Tax Agreement (SSUTA). States are
jumping on the SSUTA bandwagon, which provides incentives to
out-of-state merchants to pay affected states any overdue
sales tax on Internet sales. This article explains how SSUTA
is pushing the sales tax collection agenda.
Read more
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Employers are catching on
to Health Savings Accounts
Health Savings Accounts (HSAs)
offer a tax-advantaged way for employers to pass along
health care costs to employees, while helping them save
for these costs. This article discusses how employees
can use an HSA to pay qualified health care
expenses—including long-term care expenses and insurance
premiums—with tax-free dollars and what you need to do
to make it all possible. An informative sidebar provides
even more cost-cutting health care strategies.
Read more
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