Taxes

Someone once said that the only two sure things in life are death and taxes. Oh, by-the-way have you filed your 2009 Federal Income Tax return yet? Time is running out.

Are you one of those procrastinators who wait right up until the last minute to file your return, or do you file early and have your refund spent before the due date rolls around? Either way you must admit that the tax laws, on which your return is based, are getting more complex every year.

Preparing and filing your income tax return once was relatively simple, but not anymore. Unless you only have W-2 income and elect the standard deduction you had better seek professional help in preparing your return lest you run afoul of the IRS or miss some deduction that you are entitled to claim. Return preparation is a complex process and even with today’s tax prep software the user must have a good understanding of the Federal tax laws in order to properly enter the information in the software program so it will be reported correctly on the tax return.

I saw a cartoon of a tax return once that only had two lines. The top line asked “How much did you make?” and the bottom line said “Send it in.” If our tax laws continue to grow in complexity we may find that the cartoon has become reality. I don’t think that we have quite reached that point yet but what do you think?

HIRE BABY HIRE

The Hiring Incentives to Restore Employment Act (HIRE) also known as the “jobs bill,” was signed into law by the President on March 18, 2010. The bill contains temporary tax breaks for employers who hire and retain unemployed workers as well as a couple of other job related incentives. There are four major provisions of the bill:

· Payroll Tax Holiday. Qualified employers are relieved of the employer share of OASDI tax (6.2%) on newly hired unemployed workers. The new worker must not have been employed for more than 40 hours during the previous 60 days and must not be hired to replace a current employee unless that person resigned voluntarily or was terminated for cause. The worker must be hired after February 3, 2010 and before January 1, 2011. The relief applies to wages paid after March 18, 2010 and before January 1, 2011.

· Retained Worker Credit. A $1,000 income tax credit can be claimed for each “retained worker” who remains on the payroll for 52 weeks. A retained worker is a newly hired unemployed worker as defined above. The tax credit will be taken in the employer’s 2011 tax return.

· Section 179 Limits. For tax years beginning in 2010 the maximum amount of Section 179 fixed assets that can be expensed is $250,000 and the maximum amount of 179 purchases before reduction is $800,000. These are the same amounts that were allowed for 2009.

· Highway and Mass Transit Funding. The bill also included funding for some highway and mass transit projects as well as increases to the Build America Bonds program. This program is designed to help fund state and municipal construction projects.

It has been reportd that the bill is viewed by some congressional members and economists as being too small and ineffective. What do you think?

To learn more about the HIRE Act be sure to attend the upcoming Gear Up Mid-Year Tax Update. For more information go to http://gearup.com/Apps/cart/BrowseByTopic.aspx?Code=10-s210