HALLIDAY & COMPANY is interested in helping you achieve your individual and business financial goals.  Understanding basic financial and tax concepts will help prevent costly mistakes and allow you to operate as efficiently as possible.  For this reason, we publish  “ACCOUNT-ABILITY” as a resource of helpful information, which we hope, will benefit you personally and/or as a business owner.

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This newsletter offers factual and up-to-date information on the subjects discussed, but should not be regarded as a complete analysis of these subjects.  No party assumes liability for any loss or damage resulting from reliance or use of this material.

SIMPLE RETIREMENT PLANS NEED TO BE ESTABLISHED BY SEPTEMBER 30

 September 2004 Continued

Companies that would like to set up SIMPLE retirement plans for 2004 need to act soon.  SIMPLE plans are retirement programs for small companies, those with 100 or fewer employees.  Employers must match employee contributions up to 3% of all participating employees compensation or contribute 2% of all participating and non-participating employees compensation.  Employees can have withheld from their paychecks up to $9,000 or $10,500 if they were born before 1955.

 

SIMPLE retirement plans must be set up by September 30, 2004 to make contributions for 2004.  Employers can use IRS Form 5304-SIMPLE (if not using a designated financial institution as a trustee) or 5305-SIMPLE (Traditional Plan) to establish plans.  Both of these forms are available on our website www.hallidaycpa.com under the link “Federal & State Tax Forms”.

Purchasing medicines from abroad can impact your taxes.

Buying medicines from abroad comes with a hefty tax price.  The cost is not deductible as a medical expense, according to the IRS.  That is because federal law prohibits importing prescription drugs from Canada and other countries.  For that same reason, the cost of these medications cannot be reimbursed by flex plans or health reimbursement arrangements. 

 

Remember to compare the savings when figuring how much you will save by buying imported drugs vs. using a health reimbursement program or attempting to deduct the medical cost on your tax return (note:  to deduct medical costs on your tax return they need to total at least 7.5% of your total income and then you can only deduct what is in excess of that 7.5% total).