OKAY... BLAH, BLAH, BLAH.. WILL THIS AFFECT THE TAX REFUND SEASON OR OBAMACARE LAUNCH DATE OF OCTOBER 1ST!! LOL

The IRS will continue to process electronic tax returns under its contingency plan, and it will take steps to protect data and continue criminal enforcement operations. But it won’t be able to perform exams, give phone assistance, or accept non-electronic returns. Only 9 percent of the agency’s personnel (about 8,700 of the 95,000 employees) will be allowed to work. The plan did not address what would happen if the shutdown continued into the filing season, but it said that if the situation lasted more than five days, the IRS would reevaluate its needs.

The essence of the contingency plan is that the IRS will essentially be crippled during any shutdown. But implementation of the Affordable Care Act (a.k.a. Obamacare) will proceed. That’s right — the October 1 launch date for many provisions of the ACA will be unaffected by any government shutdown. The Department of Health and Human Services contingency plan made it clear that healthcare exchanges will open on schedule. The IRS ACA office will have four employees, including its director, exempted from the shutdown.
ACA implementation can proceed because it is mandatory spending not tied to the annual appropriations bills. There is some legal wriggle room for HHS and the IRS to push forward on the ACA despite a shutdown, and, of course, the administration plans to use it. This isn’t new information. In July the Congressional Research Service informed Oklahoma Republican Sen. Tom Coburn that a government shutdown would not cause all ACA functions to cease. The CRS, like HHS, cited the mandatory spending components of the ACA to support its finding.

So Republicans can’t win their fight against Obamacare simply by shutting down the government. Obstruction isn’t enough. ACA implementation will proceed whether a continuing resolution is agreed to or not. Republicans need to actually pass legislation. Their only hope for victory is to get the Democratic Senate to pass a bill that delays or defunds healthcare reform — and then for President Obama to sign it. No one, not even Sen. Ted Cruz, has ever outlined a plausible (or even an implausible) scenario for how that will happen.

So if House Republicans can’t destroy Obamacare, what is their goal? What is the endgame? That’s hard to know. In some ways, the GOP has already won on a key point. No one is talking about undoing the effects of the sequester. The focus on the ACA has shifted the debate from the harsh discretionary spending cuts to defunding efforts. So any possible “clean” continuing resolution will still include the sequester cuts. But Republicans have frittered away the political benefits of that triumph by making it seem as though this debate is all about the healthcare law. That means Democrats will seem like winners when Republicans inevitably have to accept the fact that Obama isn’t going to sign a bill that undoes his signature accomplishment.

How many federal employees would be affected by a government shutdown?

 More than 800,000 out of some 2.1 million federal workers (excluding the Postal Service) will get sent home if the government shuts down.

Can you give me an agency-by-agency breakdown of the impacts?

Yes. We've been compiling a detailed list here at the Post, but here's a brief overview, showing how many employees are furloughed, and examples of who stays and who goes:

Department of Commerce: 87 percent of the agency's 46,420 employees would be sent home. (The Weather Service remains, Census Bureau employees go home.)

Department of Defense: 50 percent of the 800,000 civilian employees would be sent home while all 1.4 million active-duty military members would stay on. (Environmental engineers, for instance, get furloughed.)

Department of Energy: 69 percent of the agency's 13,814 employees would be sent home. (Those in charge of nuclear materials and power grids stay. Those conducting energy research go home.)

Environmental Protection Agency: 94 percent of the 16,205 employees will be sent home. (Those protecting toxic Superfund sites stay. Most regulators get sent home.)

Federal Reserve: Everyone would stay, since the central bank has an independent source of funding.

Department of Health and Human Services: 52 percent of 78,198 employees would be sent home. (Many food regulators will stay, those overseeing mental health programs would go home.)

Department of Homeland Security: 14 percent of the 231,117 employees would go home. (Border Patrol would stay. Operations of E-Verify would cease.)

Department of Housing and Urban Development: 95 percent of the 8,709 employees would go home. (Those in charge of guaranteeing mortgages at Ginnie Mae would stay, as would those in charge of homelessness programs. Everything else would stop.)

Department of Labor: 82 percent of the 16,304 employees would be sent home. (Mine safety inspectors will stay, those working on economic data in the Bureau of Labor Statistics will get furloughed.)

NASA: 97 percent of the 18,134 employees would be sent home. (Employees working on the International Space Station will stay. Most engineers will go home.)

Department of Interior: 81 percent of the 72,562 employees would be sent home. (Wildlife law enforcement officers would stay, but the parks themselves would close.)

Department of Justice: 15 percent of the 114,486 employees would go home. (FBI agents, drug enforcement agents, and federal prison employees would stay. Some attorneys would go home.)

U.S. Postal Service: Everyone would stay, since the Postal Service is self-funded.

Social Security Administration: 29 percent of the 62,343 employees would be sent home. (Claims representatives would stay, actuaries would go home.)

Department of Treasury: 80 percent of the 112,461 employees will be sent home. (Those sending out Social Security checks would stay, IRS employees overseeing audits would go home.)

Department of Transportation: 33 percent of the 55,468 employees will get sent home. (Air traffic controllers will stay, airport inspections will cease.)

Department of Veterans Affairs: 4 percent of the 332,025 employees would go home. (Hospital workers would stay, some workers in charge of processing benefits would go home.)

A much, much more detailed list can be found in the agency contingency plans prepared here.

BUSINESS OWNERS AND TAXES

Filing

Employer Identification Number
An Employer Identification Number (EIN), also known as a federal tax identification number, is used to identify tax reports to the IRS.

Business Taxes
The form of business you operate determines what taxes you must pay and how you pay them.

Estimated TaxesFederal income tax is a pay-as-you-go tax. You must pay the tax as you earn or receive income during the year. There are two ways to pay as you go: withholding and estimated taxes.

Employment Taxes for Small Businesses
If you have employees, you are responsible for several federal, state, and local taxes. As an employer, you must withhold Federal income tax withholding, social security and Medicare taxes, and Federal Unemployment Tax Act (FUTA) taxes.

Self-Employment Taxes
The self-employment tax is a social security and Medicare tax for individuals who work for themselves.

Reporting Information Returns
Your business may be required to file information returns to report certain types of payments made during the year.

e-File Form 940, 941 or 944 for Small BusinessesLearn your options for e-filing form 940, 941 or 944 for Small Businesses.

Filing Past Due Tax Returns
Before you decide not to file your tax return on time or not pay all of your taxes when they are due, consider this.

Reporting Payments to Independent Contractors
If you pay independent contractors, you may have to file Form 1099-MISC, Miscellaneous Income, to report payments for services performed for your trade or business.

It should be noted that anytime self-employment tax is mentioned, it only refers to Social Security and Medicare taxes and does not include any other taxes that self-employed individuals may be required to file. The list of items below should not be construed as all-inclusive. Other information may be appropriate for your specific type of business.

• What is Self-Employment Tax?
• Who Must Pay Self-Employment Tax?
• How Do I Pay Self-Employment Tax?

What is Self-Employment Tax?

Self-employment tax is a tax consisting of Social Security and Medicare taxes primarily for individuals who work for themselves. It is similar to the Social Security and Medicare taxes withheld from the pay of most wage earners.

You figure self-employment tax (SE tax) yourself using Schedule SE (Form 1040). Social Security and Medicare taxes of most wage earners are figured by their employers. Also you can deduct the employer-equivalent portion your SE tax in figuring your adjusted gross income. Wage earners cannot deduct Social Security and Medicare taxes.

Self-Employment Tax Rate

The 2010 Tax Relief Act reduced the self-employment tax by 2% for self-employment income earned in calendar year 2011. The self-employment tax rate for self-employment income earned in calendar year 2011 is 13.3% (10.4% for Social Security and 2.9% for Medicare).  The Temporary Payroll Tax Cut Continuation Act of 2011 extended the self-employment tax reduction of 2% for calendar year 2012 so the rates for 2011 remain in effect for 2012. For self-employment income earned in 2013, the self-employment tax rate is 15.3%. The rate consists of two parts: 12.4% for social security (old-age, survivors, and disability insurance) and 2.9% for Medicare (hospital insurance).

For both 2010 and 2011, the first $106,800 of your combined wages, tips, and net earnings are subject to any combination of the Social Security part of self-employment tax, Social Security tax, or railroad retirement (tier 1) tax. Income you make after $106,800 will not be subject to the Social Security tax.

All your combined wages, tips, and net earnings in the current year are subject to any combination of the 2.9% Medicare part of Self-Employment tax, Social Security tax, or railroad retirement (tier 1) tax.

If your wages and tips are subject to either Social Security or railroad retirement (tier 1) tax, or both, and total at least $106,800, do not pay the Social Security part of the self-employment tax on any of your net earnings.  However, you must pay the 2.9% Medicare part of the self-employment tax on all your net earnings.

If you use a tax year other than the calendar year, you must use the tax rate and maximum earnings limit in effect at the beginning of your tax year. Even if the tax rate or maximum earnings limit changes during your tax year, continue to use the same rate and limit throughout your tax year.

Self-Employment Tax Deduction

You can deduct the employer-equivalent portion of your self-employment tax in figuring your adjusted gross income. This deduction only affects your income tax. It does not affect either your net earnings from self-employment or your self-employment tax.

If you file a Form 1040 Schedule C, you may be eligible to claim the Earned Income Tax Credit (EITC). Learn more about EITC, or use the EITC Assistant to find out if you are eligible.

Self-Employment Health Insurance Tax Deduction

Under Section 2042 of the Small Business Jobs Act, a deduction, for income tax purposes, is allowed to self-employed individuals for the cost of health insurance. This deduction is taken into account in calculating net earnings from self-employment. See the Form 1040 and Schedule SE instructions for calculating and claiming the deduction.

Who Must Pay Self-Employment Tax?

You must pay self-employment tax and file Schedule SE (Form 1040) if either of the following applies.

• Your net earnings from self-employment (excluding church employee income) were $400 or more.
• You had church employee income of $108.28 or more.

Generally, your net earnings from self-employment are subject to self-employment tax.  If you are self-employed as a sole proprietor or independent contractor, you generally use Schedule C or C-EZ to figure net earnings from self-employment.

If you have earnings subject to self-employment tax, use Schedule SE to figure your net earnings from self-employment.  Before you figure your net earnings, you generally need to figure your total earnings subject to self-employment tax. 

Note:  The self-employment tax rules apply no matter how old you are and even if you are already receiving Social Security or Medicare.

Family Caregivers and Self-Employment Tax

Special rules apply to workers who perform in-home services for elderly or disabled individuals (caregivers). Caregivers are typically employees of the individuals for whom they provide services because they work in the homes of the elderly or disabled individuals and these individuals have the right to tell the caregivers what needs to be done. See the Family Caregivers and Self-Employment Tax page and Publication 926 for more details.

How to Pay Self-Employment Tax

To pay self-employment tax, you must have a Social Security number (SSN) or an individual taxpayer identification number (ITIN). 

Obtaining a Social Security Number

If you never had an SSN, apply for one using Form SS-5, Application for a Social Security Card.  You can get this form at any Social Security office or by calling (800) 772-1213. Download the form from the Social Security Number and Card Web site.

Obtaining an Individual Taxpayer Identification Number

The IRS will issue you an ITIN if you are a nonresident or resident alien and you do not have and are not eligible to get an SSN.  To apply for an ITIN, file Form W-7, Application for IRS Individual Taxpayer Identification Number. 

Paying Self-Employment Tax with Estimated Taxes

As a self-employed individual, you may have to file Estimated Taxes quarterly. You can use these estimated tax payments to pay your self-employment tax. Refer to the Estimated Taxes page andPublication 505, Tax Withholding and Estimated Tax for more details on paying your self-employment tax with Estimated taxes.

OBAMACARE IN A NUTSHELL

I PERSONALLY THINK IT IS GREAT IDEA.  ANYTHING NEW WILL HAVE ITS UPS AND DOWNS, BUGS TO WORK OUT ETC.  IT STARTS ON OCTOBER 1, 2013.

Approximately 44 million Americans are without health insurance. It is anticipated that 7 million citizens will lose their job-based insurance in the near future. The following is Obamacare basics in a nutshell.

Obamacare includes reforms to both the health care and the insurance industries. These changes are anticipated to take place over the next several years.

It includes measures that enable most U.S. citizens to afford to pay for private insurance. By 2014, you are required to purchase your own “government-approved” health insurance, if health insurance is not offered by your employer, or pay a tax penalty.

Based on your income, you either qualify for Medicaid (family of four with an annual income of $23,050), get assistance to pay for insurance (family of four with an annual income of $92,200) or you do not quality for any assistance (health insurance plan costs less than 8 percent of your annual income).

Those who cannot afford insurance, families between 100-400 percent of the poverty level, gain payment assistance through exchanges.

What, you may ask, are exchanges? Exchanges are like coupons or rebates (online market place) to help offset the cost of your health insurance.

What is the penalty should you chose not to purchase health insurance? An annual fee ranging from $95-$695. This penalty depends on your income (can be as high as 2.5 percent of one’s annual income by 2016) and will be phased in over the next three years, starting in 2014. This will be paid at tax time.

Obamacare will impact employer provided medical coverage significantly. Based on the number of full-time employees, businesses may be required to offer their workers health insurance. Companies with over 200 full-time employees must automatically enroll their workers in health insurance plans.

If a business has fewer than 50 full-time employees, the employer may chose to offer insurance. If the employer does not offer insurance and has even one employee who qualifies for insurance subsidies, the employer will be taxed $2,000 annually for each employee over 30 employees who qualifies for the exchanges. Employers with fewer than 50 workers are exempt from these penalties. Employers who want to provide health insurance to their employees may qualify for tax credits and may be eligible to use the health insurance exchange (opens Oct, 1, 2013) to pay for the health insurance premiums.

The hope is that by 2022, the Affordable Care Act will have expanded coverage to 33 million Americans who would otherwise be uninsured. It is expected to cost $1.1 trillion over the next 10 years. The Congressional Budget Office claims this will reduce our nation’s deficit by $143 billion.

Patients frequently ask me what I think about Obamacare. Certainly, there are good points to this legislation, for example, allowing young adults under age 26 to remain on their parents’ insurance plan, prohibiting insurance companies from denying coverage due to “pre-existing conditions” or from dropping you once you become ill, and providing coverage for preventative services.

I think Obamacare will greatly help working Americans who cannot afford insurance but do not qualify for Medicaid. Unfortunately, there certainly will be a price to pay for providing “affordable quality” health care.

This may come in the form of taxes (over 20 new taxes to be phased in through 2018), less access to physicians (who will be taking care of the million newly insured in the face of projected doctor shortages), or worse, cause a halt in job growth (employers may be less likely to hire individuals from low income households or less likely to hire full time workers at all).

Our current health industry is terribly flawed. The optimist in me hopes that the Affordable Care Act will improve the delivery and breadth of health care; the skeptic and realist in me, however, does not see Obamacare as the solution. Time will certainly tell.

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