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Items of Note for 2010 Tax Planning Purposes

Gift Taxes

You can save gift and estate taxes by making gifts sheltered by the annual gift tax exclusion before the end of the year.  You can give $13,000 in 2010 to an unlimited number of individuals. 

  • The gift tax rate for 2010 is 35%.  In 2011, graduated rates increase to a maximum of 55%.  Does gifting make sense for you in 2010? 

Health Care costs and reimbursements 

  • The 2010 Health Care Act includes a tax credit for health care costs paid by certain small business employers for tax years beginning January 1, 2010.  For additional information, see the article on our website at www.bdcocpa.com
  • The 2010 Health Care Act includes a mandate that beginning in 2014, U.S. citizens and legal residents hold qualifying health coverage or be subject to a tax penalty as well as several other provisions that will generally become effective in 2013. 
  • Effective for tax years beginning after December 31, 2010 the costs for over-the counter drugs not prescribed by a doctor may no longer be reimbursed from HSAs, FSAs and MSAs. 

Medicare tax increase

Effective for 2013, taxpayers earning more than $200,000 (single) or $250,000 (married) will be taxed an additional 0.9% of total income in Medicare tax.

Information Returns

  •  Effective for tax years beginning in 2011, W-2 forms will be required to disclose the cost of employer-sponsored health insurance benefits.
  • Rental property expense payments made after December 31, 2010 must be reported on Form 1099.
  • Form 1099 reporting will be required for payments for goods and property made after December 31, 2011 by a trade or business. The $600 per payor threshold that previously existed for services will also apply here. 
  • Failure to file information returns, including Form 1099, will result in stiffer penalties effective January 1, 2011.