Fall 2010 issue of Horizons

Professional Services – continued

In addition, businesses of all sizes can now carryback operating losses for up to five years. Previously this 5-year carryback was limited to small businesses with revenues of $15 million or less. The temporary surtax of 0.20 percent on the federal unemployment tax is extended through June 2011. The rate continues to be 6.2 percent.

A company can save a maximum of $6,621 if it hires an unemployed worker and paid that worker at least $106,800 (the maximum amount of wages subject to Social Security taxes). This reduced tax withholding will have no effect on the employee’s future Social Security benefits. As an additional incentive, for any qualifying worker hired under this initiative that the employer keeps on the payroll for a continuous 52 weeks, the employer is eligible for an additional non-refundable tax credit of up to $1,000 after the 52-week threshold is reached, to be taken on their 2011 return. Finally, the HIRE Act extends business expensing rules, which allow qualifying businesses the option to currently deduct the cost of business machinery and equipment, instead of recovering it via depreciation over a number of years. For tax years beginning in 2010, the maximum amount that a business may expense is $250,000, and the expensing election begins to phase out when a business buys more than $800,000 of expensing-eligible assets. These dollar limits are the same as those that were in effect for 2009. 5. Healthcare Reform Legislation Much has been published about both of the bills that make up the landmark healthcare reform legislation (read the summary on pages 15-18). For businesses, here are a few provisions broken down by year: 2010: Eligible employers may qualify for a tax credit up to 35 percent of their contribution toward their employee’s health insurance premiums. Also, if you provide Medicare Part D Coverage Gap insurance, you qualify for a $250 rebate. 2011: Calculate the value of each employee’s health coverage so you can report it on W2s in January 2012. Also, non-prescription medicine

4. Hiring Incentive To Restore Employment (HIRE) Act

To help stimulate the hiring of workers by the private sector, the HIRE Act exempts any private-sector employer that hires a worker who had been unemployed for at least 60 days from having to pay the employer’s 6.2 percent share of the Social Security payroll tax on that employee for the remainder of 2010.

RubinBrown Partner Mark Jansen presents on tax issues to engineers at the Midwest States Conference of the American Council of Engineering Companies.

Raise Your Expectations

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