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HIRE act offers tax incentives for businesses
Norman G. Grill, Jr.
Apr-09-10, 01:12 PM
The Hiring Incentives to Restore Employment (HIRE) act, signed into law
March 18, provides tax incentives for hiring and retaining workers and
buying equipment and many other business assets. Here’s a quick
overview.
Payroll tax forgiveness: This essentially exempts
qualified employers (generally employers other than government entities)
from having to pay the 6.2 percent Social Security portion of Federal
Insurance Contribution Act (FICA) taxes on certain new hires through the
end of the year. To qualify, a worker must be hired after Feb. 3, 2010,
and before Jan. 1, 2011, and must have been unemployed (defined as not
having worked more than 40 hours) for the 60-day period ending on his or
her start date.
Retention credit: This credit applies to workers who
qualify for payroll tax forgiveness if they are retained for 52
consecutive weeks. The tax savings per qualified retained worker are
equal to the lesser of 6.2 percent of the wages paid to the worker in
2010 or $1,000.
Sec.
179 expensing: The HIRE act extends the increase in the
Section 179 limit for initial year expensing to $250,000 (from
$134,000). The Sec. 179 expensing election allows a current deduction
for newly acquired assets that otherwise would have to be depreciated
over a number of years. The act also extends the increase in the
threshold at which the expensing election begins to phase out to
$800,000 (up from $530,000). The higher limits apply for calendar year
2010 or a business’s fiscal year that begins in 2010. A business can
claim the expensing election only to offset its net income, not to
reduce net income below zero.
Other provisions
The HIRE act includes additional provisions that may be of benefit to
you, such as:
A new election to convert tax credit bonds to Build America Bonds;
Extension of highway and transit programs through 2010;
Strengthening of foreign account tax compliance; and
Deferral of implementation of “worldwide allocation of interest” to
2020.
Various changes to estimated tax payment requirements for certain large
corporations also were included in the act, but they don’t go into
effect until 2014 or later.
This has been a general discussion and is not intended as advice. HIRE’s
new regulations might provide your business with valuable tax savings,
but the rules can be complicated. So you should discuss with your
financial adviser how it may apply to your specific situation.
Norman G. Grill, CPA, is managing partner of Grill
& Partners L.L.C., certified public accountants and consultants with
offices in Fairfield and Greenwich. Reach him at
N.Grill@GRILL1.com
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