You can tan outside all you want free of tax, but beginning July 1, if you go to a tanning salon, you’ll pay a 10% excise tax in addition to the salon’s tanning fees. This is part of the healthcare reform legislation, included in part to provide revenue for the costs of that law but also to discourage an activity that causes healthcare costs due to the increased risk of cancer for those who expose their skin to radiation. Regulations on this new tax have just been issued, dealing with such issues as when the excise tax doesn’t apply because the individual is obtaining a prescribed medical treatment (such as for seasonal affective disorder).
Archive for June, 2010
Tanning Excise Tax Regs
Tuesday, June 15th, 2010Healthcare Regs on Grandfathered Plans
Tuesday, June 15th, 2010The Treasury Department has issued regulations providing interim rules on provisions of the Patient Protection and Affordable Care Act — the healthcare reform legislation — that excuse certain previously existing plans from complying with some of the law’s requirements. These “grandfathered plans” must comply with some of the new rules but not others, as the law balances the goal of letting people keep their existing coverage with the goal of improving access to coverage and quality of coverage. (more…)
Muddled Thinking on Roth Conversions
Monday, June 14th, 2010I couldn’t possibly comment on every article that comes out on Roth conversions. My Google alert for that topic comes up with so many entries on a daily basis that it would be a full-time job just to read them all. The vast majority reflect muddled thinking on the subject. Today’s piece in the Wall Street Journal on reasons not to convert is no exception. (more…)
Friday Wrapup
Friday, June 11th, 2010The most active piece of tax legislation right now bears the name American Jobs and Closing Tax Loopholes Act of 2010. Congress is working on other tax legislation as well, including tax breaks for small business and a permanent fix for the estate tax. Here’s where things stand. (more…)
Win a Free Copy
Wednesday, June 9th, 2010Jesse Michelsen, a young computer technician (and husband and father) blogs about money at a fine website called Personal Finance Firewall. He was kind enough to review our new book, That Thing Rich People Do, and he’s giving away a copy to an individual randomly selected from among those who respond to his request for comments on retirement planning at the end of the review. Take a look and you may win a free copy of our book while introducing yourself to an interesting blog.
Healthcare Rumor Mill
Tuesday, June 8th, 2010Beginning 2011, employers providing health insurance to employees will have to show the cost of that insurance on Form W-2. (This means the first time you’ll see this information on Form W-2 will be early in 2012, when you receive your form for 2011.) The new requirement has touched off a viral email warning that employer-provided health insurance coverage will become taxable next year. Not so: the new reporting requirement is solely for information purposes. Employees will continue to receive these benefits free of tax. The only difference will be the inclusion of this eye-opener on the form.
Just Bragging
Tuesday, June 8th, 2010The Midwest Book Review, a respected independent reviewer, has given a five-star review to our new book on investing, That Thing Rich People Do, calling it “a top pick for any aiming to get money and keep it.” The full review is posted at Amazon.com
Changing Tax Rates Affect ISO Strategy — Part II
Tuesday, June 8th, 2010In a previous post we explain why, for years prior to 2010, it was potentially advantageous for individuals holding incentive stock options with large built-in profits to adopt a strategy under which they sell 65% of the shares immediately after exercising the option and hold 35% of the shares long enough to avoid a disqualifying disposition. In this post we explain how the “35% solution” changes for options exercised in 2010, and changes again for options exercised in 2011. (more…)
More on California Registered Domestic Partners
Monday, June 7th, 2010Changing Tax Rates Affect ISO Strategy — Part I
Friday, June 4th, 2010Strategies for incentive stock options are complicated by the need to factor in the effect of the alternative minimum tax (AMT). In my writings on managing stock options — Consider Your Options, a book for option holders, and Equity Compensation Strategies, a text for professional advisors — I explain why the optimal approach from a tax perspective for people who have very large profits built into their ISOs is to sell 65% of the shares immediately after exercise of the option and hold 35% long enough to convert the profit on those shares to long-term capital gain. The “35% solution” changes when tax rates change. This is the first of two articles on how these changes affect ISO strategy for options exercised this year, given that shares not sold immediately will be taxed at next year’s capital gains rates, and for options exercised in later years, when both regular tax rates and capital gains rates will be higher.
Finanacial Advisor magazine published an article quoting us on this subject and referring to this series of articles. (more…)
