Changes The one constant in all are the Revenue Raiser provisions in each act.
Recent Tax Legislation Mar 18, 2010- Hiring Incentives to Restore Employment Act (HIRE) Mar 23, 2010 - Health Care and Education Reconciliation Act of 2010 Mar 23, 2010 – Patient Protection and Affordable Care Act Sept 16, 2010 – Small Business Jobs Act of 2010 Dec 17, 2010 -Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 Oklahoma – Suspension of Credits & New Capital Tax
Code Section 179 First Year Expensing Election Maximum Phase Out Begins 201020112012 201020112012 Law at 1/1/2010 $ 25,000 $ 200,000 Hire Act 3/10/2010 $250,000 $ 25,000 $ 800,000 Small Business Jobs Act 8/5/2010 $500,000 $ 25,000 $2,000,000 $200,000 Added Qualified LHI50% Rest and Retail $250,000 2010 Tax Relief Act 12/17/2010 $500,000 $ 125,000 $2,000,000 $500,000
Recent Tax Legislation-26 little acts Jan 2, 2011-9/11 Health and Compensation Act Dec 29, 2010-Omnibus Trade Act (Health Care Credit) Dec 8, 2010 The Claims Resettlement Act of 2010 Oct 5, 2010 -Plain Writing Act of 2010 Airport Acts-7 Regulated Investment Company Act-1 Surface Transportation Act-1 Firearms Excise Tax-1 Relating to Duties and import restrictions-2 Medicare, Medicaid and VA benefit Acts-4 Unemployment extension-3 Wall Street Reform and Consumer Protection Act Extension of Homebuyer Credit for 3 months Haiti Airlift
March 18, 2010 – HIRE Waiver of employer portion of FICA tax for wages paid to a qualified employee that was hired between Feb 3 and Dec 31, 2010 A credit for retaining the employee for 52 weeks (maximum of $1,000) The waiver is limited to 2010 and the credit is limited to 2011 Several provisions relating to Transportation Programs Detail reporting of foreign investment and operations subject to a $10,000 penalty with income tax return beginning with the 2011 return.
New Health Care Provisions-Employer Challenges March 23, 2010 to 2018 Phase in of policy changes to extend cover to older children, remove preexisting conditions and remove annual and lifetime limits for certain coverage (2011-2014) Penalty for not covering employees-$2,000 each (2014) Penalty for providing coverage that is not affordable to lower paid employees-$3,000 for certain ones (2014) Reporting to government of employee information, by month including family information (2014) Tax on excess health benefits to employees (2018) Value of health benefits disclosed on W-2 (2011) Form 1099s for everyone- Payments made after Dec 31, 2011 Exception if made by credit card Confidentiality, storage and lots of 1099 Doubled penalties for not filing
New Health Care Provisions-Individuals and Trust Penalty up to 2% of income for not having coverage (2014) Additional.9% Medicare tax on earned income Earnings exceeding $200,000 (single)/$250,000 (jt) No ceiling on earnings subject to tax Note marriage penalty of $1,350 Additional 3.8% Medicare tax on investment income Income over: Individuals: $200,000 (single),$250,000 (jt), and trust ($11,150) No ceiling Note: marriage penalty of $5,700 Tax on income exceed income limit or investment income, whichever is lower.
Revenue Raisers (Taxes) Example reflecting "double hit" for a single taxpayer: Net investment income of $ 100,000 Wages of 300,000 S Corporation (active) loss of -25,000 and MAGI of $ 375,000 MAGI of $ 375,000 Investment income threshold 200,000 Income over threshold 175,000 Lesser of investment income or excess over threshold $100,000 Tax at 3.8% $3,800 Salary$300,000* Base for tax 200,000 Net $100,000 Tax at.9% $900 Total additional tax $ 4,700
Small Business Jobs Act - Sept 16, 2010 Bonus Depreciation – Extended 50% bonus to 2010 (retroactive) Sec 179 changes for 2010 and 2011 Increased from $250,000 to $500,000 Increased phase out for additions from $800,00 to $2,000,000 Certain qualified real property is eligible Reduced to $25,000 and $200,000 in 2012 Certain general business credits allowed longer carry back and offset against AMT Certain enhancements to SBA Laws and other small business initiatives Offsets – 1099 for rental property expenses ($2.5 billion over 10 years) - Double penalties for not filing Information reports (i.e. 1099s etc.)
Tax Relief Act - Dec 17, 2010 Extension of 2001 and 2003 tax provisions Lower individual tax rates Lower capital gain tax rates 15% tax rate on qualified dividends Inflation adjustment for AMT exemption Defer phase out of itemized deductions and personal exemptions Estate & Gift Set $5,000,000 exemption for estate and gifts for 2011 and 2012 Payroll Tax-2011 only 2% reduction to employees portion of Social Security
Tax Relief Act - Dec 17, 2010 Bonus Depreciation 100% for New Additions from Sept 8, 2010 through 2011 50% for 2012 additions Sec 179 changes for 2012 Increased from $25,000 to $125,000 Increased phase out for additions from $200,000 to $500,000 Reduced to $25,000 and $200,000 in 2013
Tax Relief Act - Dec 17, 2010 Host of Expired Business Tax Breaks Retroactively Reinstated and Extended Through 2011 Research Credit New Markets Extension of Indian Credit and Depreciation to 2010 and 2011 Numerous energy-related tax breaks and disaster relieve provisions extended through 2011
Summary Hidden New Law brings changes that affect: Deferred compensation plans Health care coverage of employees Required coverage in medical insurance policies Discrimination rules for profit sharing and medical coverage Consideration and timing of asset purchases Employee withholding tables
Tune up or Review by Business Planning involves review of: Business Plan Current and deferred compensation Retention policies (employees & records) Capital costs Cash planning and Pricing of goods and services Foreign investments or operations
Summary - Asset Acquisitions Bonus Depreciation – new assets with lives less than 15 years. 50% Jan 1- Sep 7, 2010 100% Sep 8, 2010-December 31, 2011 50% 2012-expiring on December 31 Sec 179 write-off – new or used assets Phase out for large dollar acquisitions Limited if business has a loss Indian Depreciation extended through 2011
New Health Care Provisions-Employer Challenges Employers Workforce Review: Composition of their workforce Wage level and differences, Competition for their employees, Part time labor, Multiple locations (states), Automation Outsourcing and Constant Communication with employees
Recent Tax Legislation - Oklahoma Changed to employment requirement for Quality Jobs Act from 12 to 24 months. Moratorium on investment credits from July 1, 2010 to June 30, 2012 Moratorium on 30 other credits Replaces the Franchise tax and LLC fee with Business Activity tax equal to $25 plus 1% of net revenue for 2011 and 2012. Limited to 2010 franchise tax-effect is to tax every business with $25 fee (Schedule Cs, LLP, etc)
IRC Sec. 199 – Qualified Producer Deduction New reporting requirements for certain 2010 transfers of stock to an employee under an or a qualified ESPP. Form 3921 or 3922 1/31/11. Quick refund if 2010 overpayment.
Both sides of House and Senate are clamoring for tax changes/reform National Taxpayer Advocates Report to Congress – Tax Reform is Highest Priority Obamas Deficit Reduction Commissions Report Flat Tax? Fair Tax? VAT?