Be rest assured we are on top of it and have already scheduled a training seminar this Friday March 26th to learn more ourselves so that we can pass on the information and help with the implementation of how it affects you in your 2010 hiring plans.....
Here are the basics....
Extension of enhanced small business expensing
(Section 179). The new law gives a one-year lease on life to
enhanced 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 2008 and 2009.
Payroll tax holiday and up-to-$1,000 credit for employers
who hire unemployed workers. To help stimulate
the hiring of workers by the private sector, the new law 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% share of the Social
Security payroll tax on that employee for the remainder of 2010. A company
could save a maximum of $6,621 if it hired an unemployed worker and paid that
worker at least $106,800—the maximum amount of wages subject to Social Security
taxes—by the end of the year. As an additional incentive, for any qualifying
worker hired under this initiative that the employer keeps on 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 tax return. In order to be eligible, the employee's pay in the
second 26-week period must be at least 80% of the pay in the first 26-week
period.
Workers hired after the date of introduction of the legislation
(Feb. 3, 2010) are eligible for the payroll tax forgiveness and the retention
bonus, but only wages paid after the date of the new law's enactment receive
the exemption for payroll taxes.
Here are some additional features of the new hiring incentive:
- The tax benefit of the new incentive is immediate.
It puts money into a business' cash flow immediately, since the tax is simply
not collected in the first place.
- The tax benefit generally applies only to private-sector employment, including nonprofit organizations—public sector jobs are generally not eligible for either benefit. However, employment by a public higher education institution would qualify.
- There is no minimum weekly number of hours that the
new employee must work for the employer to be eligible, and there is no maximum
on the dollar amount of payroll taxes per employer that may be forgiven.
-
For workers that would otherwise be eligible for the
“Work Opportunity Tax Credit,” the employer must select one benefit or the
other for 2010—no double dipping.
-
An employer can't claim the new tax breaks for
hiring family members.
-
A worker who replaces another employee who performed
the same job for the employer is not eligible for the benefit, unless the prior
employee left the job voluntarily or for cause.
-
For the hiring to qualify, the new hire must sign an
affidavit, under penalties of perjury, stating that he or she has not been
employed for more than 40 hours during the 60-day period ending on the date the
employment begins.
-
The incentive is not biased towards either low-wage
or high-wage workers. Under the measure, a business saves 6.2% on both a
$40,000 worker and a $90,000 worker.
-
The payroll tax holiday does not apply with respect
to wages paid during the first calendar quarter of 2010, but the amount by
which the Social Security payroll tax would have been reduced under the payroll
tax holiday provision during the fist calendar quarter is applied against the
tax imposed on the employer for the second calendar quarter of 2010.
-
The Act creates a similar new set of rules
permitting a payroll tax holiday for railroad retirement tax purposes.
-
The credit for retaining qualifying new hires is the
lesser of $1,000 or 6.2% of the wages paid by the taxpayer to the retained
worker during the 52-consecutive-week period. Thus, the credit for a retained
worker will be $1,000 if, disregarding rounding, the retained worker's wages
during the 52-consecutive-week period exceed $16,129.03. However, the credit is
not available for pay not treated as wages under the Code (e.g., remuneration
paid to domestic workers).
So as you can see, as always, the government's help comes with lots of catches, caveats, and exceptions! As we learn more we will share and communicate what it means for you!
Thanks
Matt
