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IRS Releases 2011 Form 8941 for Small Employers to Claim Health Care Tax Credit

The IRS recently released the updated version of Form 8941 and its accompanying instructions to be used by eligible small employers to calculate the health care tax credit. Generally, a small employer that offers health insurance coverage under a qualifying arrangement may qualify for a tax credit of up to 35 percent of the contributions it makes towards premium costs. The instructions to the Form 8941 include information about what constitutes a qualifying arrangement for purposes of the credit. A copy of the Form 8941 can be found here. A copy of the Instructions can be found here.

The Netherlands: Amendments to 30 Percent Ruling

Effective January 1, 2012, amendments went into effect that change requirements pertaining to Dutch 30 percent tax rulings. The Dutch 30 percent tax ruling permits foreign employees who are hired by a Dutch employer and who meet certain conditions to receive 30 percent of their remuneration tax free. In late 2011, the Dutch Parliament approved several amendments to the 30 percent ruling which went into effect on January 1, 2012. The amendments include, among other things, replacing the specific skills test with a fixed annual salary standard; implementing a 150 kilometer rule that generally prohibits employees residing less than 150 kilometers from the Dutch border from qualifying for a 30 percent ruling; and a reduction in the period of coverage for the 30 percent ruling for employees who previously lived in the Netherlands.

IRS Issues Additional Guidance re: Form W-2 Health Coverage Reporting

The IRS issued additional guidance regarding the employer requirement to report the value of health coverage on employees?ÇÖ IRS Forms W-2. This reporting requirement is mandatory beginning in 2012 for Forms W-2 distributed in January of 2013. The additional guidance clarifies prior guidance and provides additional guidance. For example, the new guidance clarifies that dental and vision coverage does not have to be reported if such coverage is an excepted benefit not subject to HIPAA. It also provides that employers are not required to report the cost of coverage under an employee assistance program (EAP), wellness program or on-site medical clinic if the employer does not charge a COBRA premium with respect to such coverage. The new guidance can be found here.

Payroll Tax Cut Extended through February 2012

President Obama has signed payroll tax cut legislation that temporarily extends the 4.2 percent Social Security payroll tax rate for individuals for wages paid through February 29, 2012. The Internal Revenue Service issued a statement that the new payroll tax rate should be implemented as soon as possible in 2012 but not later than January 31, 2012. Employers should make an offsetting adjustment in workers?ÇÖ pay as soon as possible, but not later than March 31, 2012 for any Social Security tax that may have been over-withheld during January. In addition, the law includes a new ?Ç£recapture?Ç¥ provision that imposes a?átwo percent tax on wages greater than $18,350 (but no more than $110,100) earned during the first two months of 2012. This additional tax is payable with the employee?ÇÖs 2012 tax return, and is not subject to reduction by tax credits or deductions. The full text of the new law… Continue Reading

IRS Releases Updated 2012 Version of the Employer’s Tax Guide to Fringe Benefits

The IRS recently released the 2012 version of Publication 15-B (Employer?ÇÖs Tax Guide to Fringe Benefits). Publication 15-B contains information for employers regarding the tax treatment of various fringe benefits that may be provided to employees. The 2012 version is similar to the 2011 version, but includes updated benefit limits for 2012 (including mileage reimbursements and qualified parking and commuter expenses) and a new discussion of the tax rules applicable to employer-provided cell phones. A copy of the new Publication 15-B is available here.

January 2012