Advantages and Disadvantages of Contributory and Non-Contributory Group Plans

Can I Deduct Health Insurance Premiums Deducted From My Paycheck - Advantages and Disadvantages of Contributory and Non-Contributory Group Plans

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As we mentioned in previous article, many corporations offer competing packages, and that's even a strategy in hiring and retaining employees. These competing packages include group insurance to plans that contribute individual withdrawal accounts or former registered pension plans, etc. In this article, we will discuss the advantage and disadvantage of contributory and non-contributory in group insurance plan.

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Can I Deduct Health Insurance Premiums Deducted From My Paycheck

I. Contributory Plan

Under this type of plan, employees conduce a quantum of group insurance premium.

1. Advantages of gift plan includes
a) prime contributed by employees addition over all prime resulting in more allinclusive group insurance plan.
b) the employees have their choices of selecting better group plans
c) Eliminate some immoderate claims, which creates high palpate ratios causing growth of prime when group plan come to be renewed.
d) In Canada, if the employees pay health care premiums and the prime exceeds 3% of their dutible revenue for the year, 17% of the number in excess of the 3% will be returned as a tax credit.

2. Disadvantage
Employees must pay quantum of their share of prime out dutible income.

Ii. Non contributory plan

Under this type of plan, no contributions are required of the employees, all group insurance prime are paid by employer.

1. Advantages
a) Employees do not conduce to the plan cost therefore, lower paid employees can participate in the same level of care as the more extremely paid employees.
b) Most of owner paid all group insurance has lower management costs and easy to setup and maintain.
c) Premiums are tax deductible for the owner and only the life insurance premiums are a dutible advantage to the employee.
d) All employees are automatically covered.

2. Disadvantages
a) Plan commonly not as allinclusive as contributory plan
b) Benefits received as payments under short term and long term disability group plan are dutible to the employee.
c) prime paid on profit of employees may be added to the dutible income.

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Advantages and Disadvantages of Long Term Care assurance

Can I Deduct Health Insurance Premiums - Advantages and Disadvantages of Long Term Care assurance

Good morning. Today, I discovered Can I Deduct Health Insurance Premiums - Advantages and Disadvantages of Long Term Care assurance. Which is very helpful in my opinion and you. Advantages and Disadvantages of Long Term Care assurance

Should You Buy Long Term Care Insurance?

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Can I Deduct Health Insurance Premiums

Most population start thinking about the possibility of needing nursing care asf they hit middle age. Many have family or family who needed home health care, assisted living, or a nursing home. At this time, population learn about the high cost of long term care, and they wonder how it gets paid for.

Consider this. Full time nursing homes can cost ,000 a year or more. Home health care may not be that much less, depending upon the number of services needed. Assisted living facilities cost less, but may still be a lot more than it costs to live on your own. And the government estimates that 40% of population who turn 65 will need some sort of nursing care during withdrawal years.

How does this get paid for? Medicare, the federal health insurance for seniors and disabled people, only pays for short term care. Medicaid does pay for nursing homes, and in fact pays for half of all of thee costs in the Us. But in order to qualify for Medicaid, a man has to deplete most of their assets.

So some population purchase a long term care insurance (Ltci) policy because they want to safe their savings in case they need to go to a nursing home. There are also alternative ways to plan for this which other choose. And many population have not done any planning at all.

Disadvantages of Long Term Care insurance

Who do some population select Ltci alternatives? Why do many population do nothing? Look at some things that they may consider.

Insurance exists to carry on risks. When you purchase an auto insurance policy, you hope you will not have to use it. With most Ltc policies, it is the same. You could pay premiums for years, never need it, and get nothing out of your policy except the security of knowing you have it. Some Ltc policies may have a return of excellent highlight but it is not common.

Ltci policies are complicated, and there are many different types. Some are more useful and flexible than others. So some types of coverage may not help you for the single situation you are in. For instance, you may have purchased a policy that only covers a nursing home. But an illness may only wish adult day care or home health care. Again, some policies will cover different types of care so you, or your family, can make a selection when the time comes.

Premiums are lower for younger and healthier people, but can go up over time. If you cannot afford to pay premiums when you get older, it will not do you any good if you have to finish coverage. You have to make sure that you can afford the policy.

Advantages of Long Term Care Insurance

Of course, a lot of population do think Ltci is a great selection to make sure they have protected their assets.. And some features may even help them before they ever need to use it.

Some policies are tax deductible. Tax remarkable plans can be deducted when you file taxes now. This makes the real cost of premiums lower than the price a business charges.

Assets are protected. If you want to support a lifetime of savings for yourself, your spouse, or your heirs, long term care is one confident way to do this. With the right policy, you will not be forced to spend down your entire estate before you qualify for Medicaid.

You will have choices. Not every nursing installation or provider accepts Medicaid. You will be able to select your inexpressive nursing home, assisted living facility, or home health care provider without worrying if they accept Medicaid payments. Some policies even offset the cost of care that is in case,granted by family members.

How to Shop For Long Term Care Policies

It is prominent to understand how varied policies work, how much they will cost, and which one will be the best plan for you. An experienced insurance agent can help you. You can also start seeing by using a favorable online long term care insurance quote form. This will allow you to see competing policies that are sold in your own local area.

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Solo professional Working From Home - What's Great About It, imagine #6 - Tax Advantages

Can I Deduct Property Taxes - Solo professional Working From Home - What's Great About It, imagine #6 - Tax Advantages

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I've been running a business from my home since 1990. While I don't know the first thing about tax law, I have had a Cpa to help me take advantage of the tax breaks for solopreneurs and home-based businesses. So I do know there are some tax benefits to the self-employed pro who works from home. There are so many benefits to running a business from your home. I've identified "eight great traits of being a home-based solopreneur" that I'm taking turns going into information on:
 

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Can I Deduct Property Taxes

1. Freedom

2. Flexibility

3. Lots of Variety

4. Less Stress

5. Lower Expenses

6. Tax Advantages

7. More control over Personal Time

8. Relaxed Dress Code!
 

The focus of this record is on trait #6 - Tax Advantages.

There are a estimate of tax advantages to having your home and office under one roof. If you had to choose just one pro to ageement with in your business, make it an accountant. This person can help you recognize all the tax benefits you're entitled to for a home business. Keep one thing in mind. These tax advantages apply only if you have a dedicated office space (in other words, not the kitchen) that is both your customary workspace and used exclusively for your business.

But when you have that set-up, you get to deduct a ration of your home's operating and depreciation expenses as a business expense. Ordinarily these deductions are a ration of your home costs based on the size of your office space. So if your home office makes up 200 square feet of your home's 2,000 square feet total, you can write off up to 10% of the mortgage interest for your home as a business cost. Other percentage-based deductions comprise mortgage interest, asset taxes paid for your home, homeowners insurance, and utilities.

There are other expenses for your home office that are wholly deductible, along with repairs and improvements to the office space, tool and supplies to equip the home office, a second phone line for the business, internet assistance and connection, and guarnatee on office equipment. And don't forget some of the unique expenses that come with working from home. Being at home may mean you must tour to and from your clients' place of business. You can typically write off that expense, at a cost per mile set annually by the Irs.

There are many other business expenses that an accountant can help you identify. In fact, the expenses you incur for an accountant or even software to have your tax return ready may be tax deductible! 

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expert Corporations - Advantages and Disadvantages

Can I Deduct Pre Tax Health Insurance Premiums - expert Corporations - Advantages and Disadvantages

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What is a pro corporation(Pc)?

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Can I Deduct Pre Tax Health Insurance Premiums

A Pc is a corporation owned and operated by one or more members of the same profession (e.g. Physicians, lawyers, accountants, dentists). The services provided by the corporation are commonly restricted to the custom of the profession.

Professional corporations are now allowed in every province and territory across Canada. In each province/territory, the pro regulatory body usually determines either its members may incorporate. For example, the regulatory body for physicians, in all provinces and territories, allows physicians to incorporate.

How does it differ from a coarse corporation?

There are some significant differences between a pro corporation and a common

corporation such as:

Only members of the same profession can be shareholders of a pro corporation in many (but not all) provinces. The officers and directors of a pro corporation must commonly be shareholders of the corporation as well. The pro corporation is commonly branch to the investigative and regulatory powers of the regulatory body governing the profession. A pro corporation will not protect a pro against personal liability for pro negligence.

As a corollary of these differences, some of the benefits commonly associated with a corporation may have a diminutive application for a pro corporation. This is further described below

Advantages of using a pro Corporation

Potential tax savings

A reduced federal and provincial corporate tax rate is applied on the first 0,000 of pro wage earned by a pro corporation. Some provinces apply the reduced tax rate on wage of up to 0,000. The provincial limit varies by province. For 2010, the combined federal and provincial tax on wage branch to the small company limit will range between approximately 11% and 19%. As a corollary of this lower rate, the combined corporate and shareholder taxes paid on pro services wage is slightly lower than if such wage were to be earned by you directly.

Potential tax deferral

Perhaps the most significant advantage of using a Pc is the capability to defer taxes. pro wage earned straight through a corporation is taxed at two levels - once at the corporate level and then again at the shareholder level when the profits are distributed to you as dividend income.

Since wage at the corporate level is taxed at a lower rate than your personal income, a tax deferral opening exists when the wage is taxed in the corporation (at the lower rate) and is not distributed to the shareholder (i.e. You). The deferral ceases when a dividend is paid to you and you pay the tax on that dividend.

Let's illustrate. If you earn a pro wage of 0,000 per year as a sole proprietor and only need 0,000 of pre-tax wage for personal expenses, you will be left with 0,000 that will be taxed at the highest marginal rate. Assuming a marginal tax rate of 47%, you will be left with 9,000 to invest.

On the other hand, if you consolidate the practice, the 0,000 will be left in the corporation and taxed at the small company rate. Assuming a corporate tax rate of 18%, the corporation will be left with 4,000 to invest.

That's ,000 more.

Sole proprietor pro corporation

Income 0,000 0,000

Personal needs (0,000) (0,000)

Remaining funds 0,000 0,000

Taxes (,000) (,000)

Net funds 9,000 6,000

Additional funds in the

professional corporation ,000

The further funds in the corporation may be used to pay off debt, buy capital assets, derive investments or fund an insurance policy

Flexible worker benefits

As an worker of a pro corporation, you can entrance clear types of worker benefits that would otherwise not be available if you were a sole proprietor or a partner in a partnership. For example, the corporation can invent an individual Pension Plan (discussed later on) or a resignation compensation Arrangement (Rca) for you. These resignation savings vehicles can also supply you with potential creditor-protection benefits. An worker health and welfare trust can also be created to supply health benefits for you and your family.

Capital gains exemption

The Canadian tax rules permit that up to 0,000 in capital gains arising from the sale of the shares of a marvelous small company corporation may be exempt from tax. This 0,000 capital gains exemption is also available for shares of a pro corporation, provided clear conditions are met. However, the ownership of a pro corporation may not be as well transferable since, in many provinces, it can only be transferred to members of the same profession.

Flexibility in remuneration

You can select to receive a aggregate of salary and dividends from a pro corporation. The decision is based on the combined corporate and shareholder taxes paid in your province of residence.

Limited market liability

A pro corporation does not commonly protect you from personal liability for pro negligence. However shareholders of a pro corporation will have the same security as other corporate shareholders when it comes to trade creditors.

Income splitting

You can split wage straight through a corporation by paying dividends to adult house members who are shareholders of the corporation. This strategy may be less applicable to pro corporations situated in provinces where share ownership is restricted to members of a singular profession. However other wage splitting strategies, such as hiring house members to work in the company and paying them a cheap wage for services rendered, are still available straight through a pro corporation.

Multiple small company deductions

As a corollary of a Canada wage agency (Cra) ruling, it is potential for professionals operating straight through a pro partnership to render their services straight through a pro corporation and be able to entrance multiple Small company Deductions (Sbds).

Income earned up to the Sbd limit of 0,000 is branch to a preferential tax rate (some provinces have a higher Sbd). Historically, the Sbd had to be shared among all corporate partners. Given Cra's new ruling, professionals currently operating as a partnership should reconsider the benefits of setting up a pro corporation to take advantage of multiple Sbds.

Individual pension plan

An individual Pension Plan (Ipp) is a defined advantage pension plan that a pro corporation can set up for the professional. The Ipp provides best annual contributions than Rsp limits for those over 40. Assets in an Ipp are protected from creditors; however, they may be branch to locking-in provisions while retirement. If you would like more facts on Ipps, please consult your advisor.

Disadvantages of a pro Corporation

Costs and complexity

The costs for establishing and maintaining a Pc are usually higher than those of a sole proprietorship. Also, a pro corporation will incur more costs to file a corporate tax return, put in order T4 slips for salaries and T5 slips for dividends. A corporation is also branch to greater regulation and yielding than a sole proprietorship or partnership.

Employer health tax and Ei premiums

Corporations in any provinces have to pay a provincial health tax levy once the corporate payroll has exceeded a clear threshold. Fortunately the basic estimate you are not taxed on is fairly high (e.g. 0,000 in Ontario) so the impact of this tax on pro corporations may not be that significant.

Business losses

You cannot claim company losses incurred by a Pc on your personal tax return; whereas, in a sole proprietorship, you may use the company losses to offset your personal wage from other sources.

Liability for malpractice

As mentioned above, a pro corporation will not protect you from personal liability for pro negligence.

Who should use a pro corporation?

A Pc can supply potential tax savings and tax deferral benefits. This may appeal to you if you do not want all of your wage to live on. pro corporations may also appeal to you if you wish to save for your resignation straight through alternative means, such as a pension plan or resignation compensation arrangement, or if you would like to limit your personal exposure to market liability.

Before incorporating, you should reconsider the cash-damming strategy, which converts all your non-deductible personal debt into tax-deductible company debt. Find out more
If you have questions on any of the issues discussed in this article, please speak with your advisor.

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