Affordable Care Act (ACA): Final Regulations on Individual Shared Responsibility Payment Liability

Under the Affordable Care Act, the federal government, state governments, insurers, employers, and individuals are given shared responsibility to reform and improve the availability, quality, and affordability of health insurance coverage in the United States. Starting in 2014, the individual shared responsibility provision calls for each individual to have minimum essential health coverage (known as minimum essential coverage) for each month, or qualify for an exemption. Otherwise, they will be required to make a payment when filing their federal income tax return.

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Employer Health Care Mandate Postponed

The Obama Administration has announced that it is postponing the Affordable Care Act's mandatory employer and insurer reporting requirements for one year. As a result, the administration also announced that it will waive the imposition of any employer-shared responsibility penalty payments for 2014. This effectively means that employers with more than 50 employees will not be required to provide health insurance to their employees or face a penalty untl 2015.

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Same-Sex Marriages Recognized for Federal Tax Purposes

In a 5 to 4 decision, the United States Supreme Court found that Section 3 of the federal Defense of Marriage Act (DOMA) violates the equal protection clause of the Fifth Amendment of the U.S. Constitution as applied to persons of the same sex who are legally married under the laws of their state (U.S. vs. Windsor). In response to Windsor, the IRS has issued Revenue Ruling 2013-17, which implements federal aspects of the decision. Under this ruling, same-sex couples who are legally married in jurisdictions that recognize their marriages will be treated as married for federal tax purposes regardless of whether or not their current place of domicile recognizes same-sex marriage. This so-called "state of celebration" approach mirrors the treatment of common law marriage set forth over 50 years ago. As a result, same-sex couples need to consider many tax implications.

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American Taxpayer Relief Act of 2012

After seemingly endless negotiations and down-to-the-wire drama, Congress has passed legislation to avert the tax side of the so-called "fiscal cliff."  The American Taxpayer Relief Act permanently extends the Bush-era tax cuts for lower and moderate income taxpayers, permanently "patches" the alternative minimum tax (AMT), provides for a permanent 40 percent federal estate tax rate, renews many individual, business, and energy tax extenders, and more. In one immediately noticeable effect, the American Taxpayer Relief Act does not extend the 2012 employee-side payroll tax holiday. As a result of the expiration of the payroll tax holiday, everyone who receives a paycheck or self-employment income will see an increase in taxes in 2013.

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Philadelphia Wage Tax Rate Update

The Philadelphia Wage Tax Rate was reduced effective July 1, 2013 as follows:

Residents: 3.924% (previously 3.928%)

Non-Residents: 3.495% (previously 3.4985%)

PA Employer W-2 Locality Reporting

Act 32, which changed local earned income tax (EIT) withholding for 2012, also changed the way W-2s are to be prepared. Instead of typing the locality name in box 20, you are now required to list the first 2 digits of the Political Subdivision Code (PSD) where the withholdings were remitted. This will generally be the employer's location. For example, an employer located in New Britain Township (NBT) should list "09" as the locality name instead of "New Britain Township." The PSD code for NBT is 090506. The first two digits - "09" - are what needs to be reported in box 20 on the W-2. Using this coding indicates a Bucks county employer who remitted tax to Keystone Collections Group.