Moneylines: News Briefs for Businesses and Individuals

Target Audience: Business Owners, Individual Tax Payers, Employees, Health Care Industries, Medical Care Expenses Interest, Accounts Payable, Electronic Payments Interest

Health care costs for employers not exactly dropping but may be improving.

The skyrocketing expense of medical care has presented a huge challenge to employers trying to offer competitive benefits plan. A survey released earlier this year by HR consultants The Segal Company provides a small glimmer of hope. Based on data culled from 70 health-care-related organizations, physician costs are expected to rise only 8.9% in 2009 compared with the 9.9% increase this year. And prescription drug costs are projected to rise 9.8%, a drop from the 10.7% uptick this year. It’s not much, but it’s something.

IRS clarifies tax treatment of dependents of divorced or separated parents.

This past summer the IRS released its Revenue Procedure 2008-48, which specifies the circumstances under which a child of divorced or separated parents may be treated as a dependent of both. According to an IRS statement, “…the IRS will treat the child as a dependent of both parents for purposes of several provisions relating to medical expenses, medical coverage and employee benefits …” As you might imagine, a variety of rules and exceptions apply so, if this sounds like something pertinent to your situation, ask your CPA for more information.

Electronic payments bolster accounts payable process.

The IRS does it; most utility companies do it; but does your business? We’re referring to the practice of allowing customers to submit payments electronically. Companies named “best in class” in a survey of 300 global finance professionals conducted by tech researchers the Aberdeen Group processed 80% of their payments electronically. A research analyst for Aberdeen commented, “Integration of electronic payment methods with existing accounting systems not only reduces costs, but also accelerates payment processing.”

Hoping for a raise next year? Here’s some cause for optimism.

Whether entry level employee or corner-office exec, everyone hopes for an annual raise. So a report released this year by human capital and financial management consultants Watson Wyatt Worldwide brings good news. Based on data gathered from almost 1,400 companies, despite the struggling economy, employers intend to grant merit increases averaging 3.5% next year, which holds steady with this year’s average and is just a point lower than the 3.6% average in 2007. Naturally, actual raises will vary by employer.

Back to Tax and Business Update Summaries

To contact Feeley & Driscoll, please click here or call us at 1 (888) 875-9770.