The Kentucky Legislature has not adopted the federal income tax treatment of the extended healthcare insurance coverage for adult children under age 27. This means that Kentucky employees who have adult children who qualify for health insurance under the new federal law will not receive the same treatment for Kentucky income tax purposes as they will under the federal tax laws. In general, employers must treat the amounts paid for adult children as being paid with post-tax dollars for the Kentucky income taxes if those adult children are not eligible for the gross income exclusion.
As a result of changes made by the Affordable Care Act (the “Act”), if a parent’s employer-sponsored health plan covers children, medical expenses incurred by a child under age 27 can be paid or reimbursed as a tax-free fringe benefit even if the child is not the parent’s dependent for tax purposes. The expanded benefit, effective March 30, 2010, applies to both workplace and retiree health plans, as well as to self-employed individuals who qualify for the self-employed health insurance deduction on their federal income tax return. A child includes a son, daughter, stepchild, adopted child, or eligible foster child.
Congress has adopted the 2010 Tax Relief Act. The Act contains a two-year extension of the Bush-Era tax cuts that was negotiated by the President and Republicans, and significant estate tax relief, as well as a trove of other tax breaks for businesses and individuals.
Your company and its employees may be subject to local occupational license fees and payroll taxes assessed by the counties and municipalities in which your company operates, even if it is not in the jurisdiction where your main office is located.
If you own or operate a business in Kentucky, make sure you have filed your Kentucky Annual Report. In a recent press release, the Kentucky Secretary of State’s office warns that tens of thousands of companies face dissolution if they don’t file their annual report by the deadline of October 31.
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