subject: IRS UPDATE – DECEMBER 2010 [print this page] IRS UPDATE DECEMBER 2010 IRS UPDATE DECEMBER 2010
What's happening at the IRS? Here's a quick update on some issues that might affect you and your taxes.
You might want to stock up on over-the-counter medicines that you use and pay for with tax-advantaged medical accounts. Effective January 1, 2011, these medications cannot be reimbursed from flexible spending arrangements (FSAs), health reimbursement arrangements (HRAs), health savings accounts (HSAs), and Archer medical savings accounts (MSAs) unless you have a prescription for them. Insulin can still be reimbursed from these accounts. If your plan permits, you may request reimbursement in 2011 for over-the-counter medicines and drugs purchased by December 31, 2010.
The IRS has issued a notice providing temporary relief from the requirement that employers report the cost of health coverage on employees' W-2 statements beginning with forms issued for 2011. The requirement to report the value of health benefits was part of the 2010 health care reform legislation. The IRS notice states that reporting for 2011 will be optional, not mandatory, giving employers more time to make changes to their payroll systems or procedures.
On October 13, President Obama signed the Plain Writing Act of 2010, a law that requires all federal agencies, including the IRS, to write guidance and forms in language people can understand. The law defines "plain writing" as language that is "clear, concise, well-organized, and follows other best practices appropriate to the subject or field and intended audience." Opponents consider the law unenforceable and not worth the $5 million a year it will cost the government.
The IRS has announced that the 2011 contribution limits for health savings accounts (HSAs) will remain the same as the 2010 limits: $3,050 for individuals and $6,150 for families. Individuals aged 55 or older may contribute an additional $1,000.
For more information on these or other tax issues, give our office a call.
