The aim of the stimulus package was to find more work for people. You probably didn’t think that meant more work for your own staffers!
While there are plenty of tax breaks and tax credits in the $776 billion economic stimulus plan, your finance department will be the one that has to administer much of it.
Here’s a rundown of some of the provisions you’ve heard plenty about (and some you’ve not) and, most importantly, what they mean to your people:
For starters, Accounts Payable gets some changes to its reimbursement duties. If your company reimburse employees for their transportation expenses, say goodbye to the old way of breaking out the expenses. The stimulus package now lets you offer $230 in tax-free transportation fringe benefits, instead of breaking them down as specific thresholds for parking, van-pooling, etc. And they’ll keep doing it that way through 2010.
But it’s Payroll that winds up with the lion’s share of the to-do list.
- Withholding changes. That much-hyped “Making Work Pay” tax credit? It’ll mean more work for Payroll. Probably starting in June, Payroll will have to withhold less federal income tax from employees’ pay, as that’s how the credit will be distributed. Note: The credit begins phasing out for individuals making $75,000 and $150,000 for married workers.
- More reporting. Also let Payroll know: They may need to do some additional reporting on your 941, which is due at the end of the first quarter. A provision in the stimulus package requires companies to initially shell out 65% of the COBRA premiums for a laid off or “involuntarily terminated” employee, then take an offset of employment taxes on Form 941. Because the window for this provision is Sept. 1, 2008 – Dec. 31, 2009, your next set of returns may be impacted.
- More W-4s to process. Thanks to a host of new individual withholding and tax credits (ATM patch, first-time home buyer’s credit, etc.), some employees may need to fill out a new W-4. And they’ll be coming to Payroll for it.
To read the entire text of the American Recovery and Reinvestment Act of 2009, click.