The Hiring Incentives to Restore Employment (HIRE) Act,
Congress left a lot of unfinished business at the end of its last session. As a result, it is currently working on a wide variety of legislation that could have a significant impact on your tax situation. The important issues are the "HIRE" jobs creation bill, health care reform, the estate tax, and the extension of various tax provisions that expired December 31, 2009.
Be aware that the following information discusses proposed, not final legislation. Provisions in pending legislation could change significantly in the final law. While it's important to stay aware of pending legislation in your tax planning, don't confuse proposals with the final law.
The Hiring Incentives to Restore Employment (HIRE) Act, providing tax breaks to businesses that add employees to their payrolls and invest in equipment has been cleared by the Senate for expected passage soon. The measure must be reconciled with House tax legislation, and the fate of many expired and expiring tax provisions remains uncertain.
If passed, hiring and retention tax incentives in the bill provide forgiveness of Social Security tax for each new “qualified” employee who is hired after February 3, 2010 and before January 1, 2011. The forgiveness would apply to pay periods beginning on or after the date of enactment through the end of 2010. Businesses would also receive a $1,000 tax credit for qualified employees who then remain employed for one year. A “qualified” employee is basically someone who has been unemployed for at least 60 days prior to being hired.
The incentives are structured to encourage businesses to hire new employees sooner rather than later.
Businesses would also benefit from an extension of enhanced Section 179 expensing, although an extension of bonus depreciation is not in the bill. The Build America Bonds program would be liberalized under the legislation, which is paid for by increased withholding and reporting requirements on foreign financial accounts of over $50,000.
What's Not Addressed. What’s also significant, however, is the list of expired and expiring measures that aren’t addressed in the bill. These include the COBRA subsidy, expired provisions for teacher’s classroom expenses, deductibility of state and local sales tax, the extra standard deduction for real estate taxes, the higher education deduction and a host of business provisions. Add in the expired estate tax, a lowered alternative minimum tax exemption and the upcoming sunset of the Bush tax cuts at the end of 2010, and it looks as though Congress will have a lot on its plate even if this bill becomes law.
To help you navigate the pending legislation
and its potential consequences, we have added a "Tax
Legislation" link on our home page www.waradydavis.com. 2010 promises
to be filled with new tax laws, accounting standard changes and other development
you will want to know about. Bookmark the link below and visit often to stay up-to-date.
As always, we are here to help. Please contact us at 847-267-9600 if you
have questions or if you would like to get together to discuss your tax-cutting
options.
Visit
www.waradydavis.com
for additional information and articles of interest.
Contact:
Marc
Heller, CPA, JD, Partner
Warady & Davis LLP
847-267-9600
mheller@waradydavis.com
www.waradydavis.com
Disclaimer:
Pursuant to Internal Revenue Service Circular No. 230, be advised that the information
contained herein was not intended or written to be used and cannot be used by
any taxpayer for the purpose of avoiding any Internal Revenue Code penalties that
may be imposed on the taxpayer. It was written with the intent of disseminating
general information related to the transaction(s) or matter(s) addressed herein.
