Posted in: Communication tips, Government, Management issues, Special Report, Tax compliance
It may have been overshadowed by the healthcare reform bill, but finance execs can’t afford to overlook the passage of the Jobs Bill.
Take a look at the four biggest changes for your business to come out of the Hiring Incentives to Restore Employment (HIRE) Act:
1. Payroll tax holiday for hiring
Besides the W-4s and I-9s and all the other ways your company sets up a new hire, there’s new attention to give to anyone who landed on your company’s payroll after Feb. 3.
You will still have to withhold, but you won’t have to remit the 6.2% OASDI Social Security tax. The feds are exempting employers from that tax for their new hires for the remainder of the year.
Let Payroll know that while this break applies to anyone your company hires from the beginning of February, you can only claim it from the time the law was enacted: March 19. Maximum savings: $6,621 per new person.
Note: Not everyone qualifies. New employees must have been unemployed for at least 60 days (or have worked less than 40 hour-weeks during those 60 days) before their start date for your company to get the break.
2. An incentive for retention
You can also qualify for another $1,000 in tax incentives. Keep this person on your payroll for at least a full (consecutive) year and your company will enjoy an additional tax credit equal to the lesser of:
- $1,000, or
- 6.2% of the employee’s annual wages.
3. More motivation to spend
It’s not just people you’re being encouraged to spend on with the HIRE Act – it’s large things, too . The jobs bill brings backs the recently-expired Section 179 expensing options to their previously higher thresholds:
- $250,000 as the maximum deduction, with a
- $800,000 phase-out limit.
No time like the present to start spending – the higher limits will expire again on Dec. 31, 2010.
4. A checklist of extenders
You would have enjoyed a lot more extensions of expired tax credits had the Senate’s version of the bill passed. But the House’s bill ultimately won out.
Still, there’s a grab bag of other extenders included in the new law that will benefit companies in certain industries. Some key examples:
- New Markets Tax Credit
- Five-Year Write-Off of Farm Machinery/Equipment
- Tax Incentives for Empowerment Zones
- Tax Incentives for the District of Columbia
- Renewal Community Tax Incentives, and
- Corporate Contributions of Computer Inventory.