IRS brochure on PPACA

1. Expanded Adoption Credit — For additional information:
Available in Tax Year 2010 Visit www.irs.gov for the most up-to-date
The Affordable Care Act raises the maximum information on the Affordable Care Act tax
provisions. In addition, the following forms and
adoption credit to $13,170 per child, up from
publications may be of assistance:
$12,150 in 2009. It also makes the credit
refundable, meaning that eligible taxpayers can get • Publication 502, Medical and Dental Expenses
Including the Health Coverage Tax Credit
it even if they owe no tax for that year. In general,
the credit is based on the reasonable and necessary • Publication 969, Health Savings Accounts and
Other Tax-Favored Health Plans
expenses related to a legal adoption, including
adoption fees, court costs, attorney’s fees and travel • Form 8839 and Instructions, Qualified Adoption
expenses. Income limits and other special rules Expenses
apply. • Form 8853 and Instructions, Archer MSAs and
Long-Term Care Insurance Contracts
In addition to filling out Form 8839, Qualified
Adoption Expenses, eligible taxpayers must • Form 8889 and Instructions, Health Savings
Accounts
include with their 2010 tax returns one or more
adoption-related documents. The documentation For tips, fact sheets, questions and answers, videos
and more, check the Affordable Care Act of 2010:
requirements, designed to ensure that taxpayers
News Releases, Multimedia and Legal Guidance
properly claim the credit, mean that taxpayers
page on www.irs.gov.
claiming the credit will have to file paper tax returns. Affordable Care Act Tax
Información en Español: Disposiciones del Acta del
Normally, it takes six to eight weeks to get a refund
Cuidado de Salud de Bajo Precio
Provisions and the IRS
claimed on a complete and accurate paper return
where all required documents are attached. The IRS
encourages taxpayers to use direct deposit to speed Other helpful websites: O n March 23, 2010, the
President signed into law the
Patient Protection and Affordable
their refund. • www.medicare.gov
• www.healthcare.gov Care Act also known by the short
Taxpayers claiming the credit will still be able to use title Affordable Care Act. The new
• www.cuidadodesalud.gov - Información en
IRS Free File to prepare their returns, but the returns law, later amended by the Health
Español
must be printed out and sent to the IRS, along with Care and Education Reconciliation
Act (HCERA) on March 30, 2010,
all required documentation.
Free Tax Return Assistance: enacts significant changes to
America’s health care system.
Volunteer Income Tax Assistance (VITA) and Tax
Counseling for the Elderly (TCE) sites offer free
The IRS is playing an important
tax return preparation to individuals with low to
role in administering the various
moderate income. To find free tax help near you, tax law provisions, which take
call IRS at 1-800-906-9887 or AARP TaxAide at effect over the next several years.
1-888-227-7669. The Department of Health and
Human Services (HHS) is the lead
agency for health insurance and
health care policies under the new
Publication 4894 (11-2010) Catalog Number 55911U
Department of the Treasury Internal Revenue Service www.irs.gov law.

2. Tax Law Changes You Should Changes to Flexible Spending Small Business Health Care Tax Credit
Know About Now Arrangements This new credit helps small businesses, and small
Effective January 1, 2011, the cost of an over-the- tax-exempt organizations, afford the cost of
The tax provisions in the Affordable Care Act
counter medicine or drug cannot be reimbursed covering their employees and is specifically targeted
(ACA) affect nearly every individual and employer.
Below are some changes that may impact you from flexible spending arrangements (FSAs) or for those with low- and moderate-income workers.
in the coming year. Please note that this list does health reimbursement arrangements (HRAs) unless a The credit is designed to encourage small employers
not summarize every tax provision in ACA. For prescription is obtained. The change does not affect
to offer health insurance coverage for the first time
more complete information on ACA, please visit insulin, even if purchased without a prescription, or
or maintain coverage they already have. In general,
www.healthcare.gov. other health care expenses such as medical devices,
the credit is available to small employers that pay
eye glasses, contact lenses, co-pays and deductibles.
The new standard applies only to purchases made at least half the cost of single coverage for their
Optional Requirement to Report the on or after January 1, 2011, so claims for medicines employees.
Cost of Employer-Provided Health or drugs purchased without a prescription in 2010
Coverage in 2011 — Amounts Remain can still be reimbursed in 2011, if allowed by the Excise Tax on Indoor Tanning Services
Not Taxable employer’s plan. A similar rule goes into effect on
January 1, 2011 for Health Savings Accounts (HSAs), A 10-percent excise tax on indoor UV tanning
Starting in tax year 2011, employers have an
and Archer Medical Savings Accounts (Archer MSAs). services went into effect on July 1, 2010. The tax
optional requirement to report the cost of employer-
doesn’t apply to phototherapy services performed
sponsored health insurance coverage on each
employee’s annual Form W-2. by a licensed medical professional on his or her
premises. There’s also an exception for certain
To provide employers the time they need to make
physical fitness facilities that offer tanning as an
changes to their payroll systems or procedures,
the IRS has made the new reporting requirement incidental service to members without a separately
optional for tax year 2011. The IRS will be publishing identifiable fee.
guidance on the new requirement later this year. In general, providers of indoor tanning services will
The IRS continues to stress that the amounts reportable collect the tax at the time the purchaser pays for the
are not taxable. The new reporting requirement tanning services. The provider then pays over these
is informational only and intended to provide Expanded Tax Benefit to Health
amounts to the government, quarterly, along with
employees with greater transparency into overall Professionals Working in Underserved
IRS Form 720, Quarterly Federal Excise Tax Return.
health care costs. Areas
Under the Affordable Care Act, health care
Health Coverage for Older Children professionals who received student loan relief under Medicare Part D Coverage Gap
— Effective March 30, 2010 state programs that reward those who work in “donut hole” Rebate
underserved communities may qualify for refunds on The Affordable Care Act provides a one-time $250
Health coverage for an employee’s children under
their 2009 federal income tax returns as well as an
27 years of age is now generally tax-free to the rebate in 2010 to assist Medicare Part D recipients
annual tax cut going forward. If you are a health care
employee. This expanded health care tax benefit who have reached their Medicare drug plan’s
professional who received forgiveness for your student
applies to various work place and retiree health coverage gap. This payment is not taxable. This
plans. These changes immediately allow employers loans in exchange for working in an underserved
community, you may now qualify for tax relief for the payment is not made by the IRS. More information
with cafeteria plans –– plans that allow employees to
choose from a menu of tax-free benefit options and portion of the loan that was forgiven. Previously, the can be found at www.medicare.gov.
cash or taxable benefits –– to permit employees to amount of the forgiven loan was considered income
begin making pre-tax contributions to pay for this and was subject to tax. Consult your state loan
expanded benefit. This also applies to self-employed program office to determine whether the program
individuals who qualify for the self-employed health is covered by the new law. If you already filed your
insurance deduction on their federal income tax 2009 return, you may submit an amended return to
return. claim this tax benefit.