|New Federal Tax Incentives for Businesses|
On March 18, 2010, President Obama signed the Hiring Incentives to Restore Employment (HIRE) Act (H.R. 2847). The new law contains several major tax incentives for small and mid-sized businesses.
Hiring and Retention Incentives
Payroll Tax Forgiveness
Employers are exempt from the 6.2% Social Security tax on any qualified employee's wages from March 18, 2010 through December 31, 2010.
A "qualified employee" is an individual hired after February 3, 2010, that has not been employed for more than 40 hours during the preceding 60-day period ending on the date of hire. The qualified employee may not replace a current employee unless the current employee left voluntarily or was fired with cause.
Employers are still liable for the 1.45% Medicare tax on qualified employees' wages. Additionally, employees related to the employer or who own 50% or more of the company are ineligible.
There is no limit on the number of hours a qualified employee must work to qualify for payroll tax forgiveness, nor is there a limit on the number of qualified employees a company may hire.
Employers that hire individuals that qualify for payroll tax forgiveness and retain them for 52 consecutive weeks may qualify for a tax credit equal to the lesser of $1,000 or 6.2% of the wages paid to each qualified employee.
Asset Acquisition Incentive
Code Sec. 179 Expensing
Businesses with qualifying property purchases may expense up to $250,000 of new property purchased during 2010 rather than depreciating it over several years.
Total asset acquisitions in excess of $800,000 reduce the expense dollar for dollar, completely phasing out the expense at $1,050,000 of acquisitions.
This new law creates opportunities with tax incentives for your business. Please contact your Berntson Porter tax professional or Dave Berthon, CPA, MAcc (Tax) at 425.454.7990 or firstname.lastname@example.org.