Very often the exact impact of a new law can be open to interpretation, and the Affordable Care Act passed by Congress in March and signed into law by President Obama is no exception. Recently, the IRS issued guidance on one aspect of the new health law impacting small businesses:
Notice 2010-44 provides detailed guidelines, illustrated by more than a dozen examples, to help small employers determine whether they qualify for the credit and to estimate the amount of the credit. The notice also requests public comments on issues that should be addressed in future guidance.

Responding to a number of taxpayer questions about the interaction of the credit with state-level health care tax credits and subsidies, the IRS guidance provides that the new tax credit will not be reduced by a state health care tax credit or subsidy, except in limited circumstances to prevent abuse of the credit.

In particular, an employer that receives such a state tax credit or subsidy will also receive the full federal credit based on its entire contribution so long as the federal credit does not exceed the employer’s net contribution. Approximately 20 states offer these benefits.

If you would like assistance in benefits planning in this ever-changing regulatory environment, please contact , or of REDW Benefits.

So, you're looking for a job in accounting. Well, in these economic times you'd be wise to not only look at the company, but the city in which the company is located. Kiplinger's Personal Finance Magazine made this observation in releasing it's 2009 Best Cities List:

When our numbers guru, Kevin Stolarick, evaluated U.S. cities for their growth potential, he looked not just at the overall number of jobs, but also at the quality of those positions and the ability of cities to hold on to them when the economy softens. (See our Methodology) Says Stolarick, who is research director at the Martin Prosperity Institute, a think tank that studies economic prosperity: "Although downturns are felt by everyone, our research has shown that the impact is less severe for those in the creative class -- people who are paid to think."

Accountants fall into that category - "people who are paid to think." And, guess what? Kiplinger's ranked Albuquerque, the city REDW calls home, the second best city in the nation. Now, maybe you want a second opinion. No problem. Look no further than U.S. News and World Report, which has Albuquerque at the top of its list of Best Places to Live 2009:

Along the banks of the Rio Grande, with the Sandia Mountains in the background, is the beautiful city of Albuquerque, N.M. The sunny climate and endless landscape have long drawn writers, poets, and artists to this spot, which includes an unconventional mix of American Indian, Hispanic, and Anglo cultures. But it's not just freethinkers who drift to this Southwestern city of 511,000. Kirtland Air Force Base, Sandia National Laboratories, and Intel Corp. have helped develop the area into a manufacturing and research hub. They provide a stable anchor for the local economy.

Albuquerque's clear skies, calm winds, and abundant sunshine present plenty of opportunities to explore its natural splendor. Each October, the Albuquerque International Balloon Fiesta fills the sky with more than 700 colorful hot-air balloons. Fourteen area golf courses are open year-round and allow duffers to tee off against spectacular backdrops of volcanoes and mountain peaks. Meanwhile, Albuquerque's foothills and network of trails make the area a wonderful destination for biking. Still, "it's kind of undiscovered at the same time," says Will McConnell of the Albuquerque Bicycle Center.

Okay, we may have cheated a little on that one. The list is alphabetical. But still, it doesn't take away from the fact that there were only ten cities that made the list. Now learn a little more about working in a great accounting firm in one of America's best cities.

The Spring 2009 edition of the IRS publication, Retirement News for Employers, answers the question of whether a former employee can opt to roll over her 401(k) account balance into a traditional IRA and then change her mind and decide instead to roll it over into a Roth IRA. The article first outlines the basic criteria which must be met to roll over 401(k) funds into a Roth IRA, and then examines a couple of different scenarios. It makes a point of noting:

Regardless of how the Form 1099-R is completed, an individual moving previously untaxed money into a Roth IRA is obligated to pay taxes on that money.

To learn more about rolling over your 401(k), or to get other employee benefit plan questions answered, please contact REDW's , or .

As lawmakers continue to ponder the best method of expanding health care coverage, one of the strategies that keeps entering the debate is taxing the health benefits workers receive from their employers.

A recent Washington Post article on the topic of taxing benefits points out these have never been counted as income. This has reduced worker’s taxable earnings by an average of $9,000 a year for family coverage. Yet, maybe for not much longer:

This week, White House budget director Peter Orszag said taxing employer benefits was among several ideas that "most firmly should remain on the table." White House economic adviser Jason Furman called for an end to the so-called "employer exclusion" before he joined the administration.

To learn more about accounting issues impacting the healthcare industry, contact REDW’s Healthcare Services experts or .

The question of whether a worker is an independent contractor or employee for federal income and employment tax purposes is a complex one. It is intensely factual, and the stakes can be very high. If a worker is an employee, the company must withhold federal income and payroll taxes, pay the employer's share of FICA taxes on the wages plus FUTA tax, and often provide the worker with fringe benefits it makes available to other employees. There may be state tax obligations as well. These obligations don't apply for a worker who is an independent contractor. The business sends the independent contractor a Form 1099-MISC for the year showing what he or she was paid (if it amounts to $600 or more), and that's it.

Who is an “employee?” There is no uniform definition of the term:

Under common-law rules an individual generally is an employee if the enterprise he works for has the right to control and direct him regarding the job he is to do and how he is to do it. Otherwise, he is an independent contractor.

Some employers that have misclassified workers as independent contractors are relieved from employment tax liabilities under Section 530 of the '78 Revenue Act. In brief, Section 530 protection applies only if the employer: filed all federal returns consistent with its treatment of a worker as an independent contractor; treated all similarly situated workers as independent contractors; and had a “reasonable basis” for not treating the worker as an employee. For example, a “reasonable basis” exists if a significant segment of the employer's industry has traditionally treated similar workers as independent contractors. Section 530 doesn't apply to certain types of technical services workers.

Individuals who are “statutory employees,” are treated as employees for social security tax purposes even if they aren't subject to an employer's direction and control (that is, even if the individuals wouldn't be treated as employees under the common-law rules). These individuals are agent drivers and commission drivers, life insurance salespeople, home workers, and full-time traveling or city salespeople who meet a number of tests. Statutory employees may or may not be employees for non-FICA purposes. Corporate officers are statutory employees for all purposes.

Individuals who are statutory independent contractors aren't employees for purposes of wage withholding, FICA or FUTA, and the income tax rules in general. These individuals are qualified real estate agents and certain direct sellers.

Some categories of individuals are subject to special rules because of their occupations or identities. For example, corporate directors aren't employees of a corporation in their capacity as directors, and partners of an enterprise organized as a partnership are treated as self-employed persons.

Under certain circumstances, you can ask IRS (on Form SS-8) to rule on whether a worker is an independent contractor or employee. Proper classification is critical in order to avoid potential fines and penalties to either party.