The 2010 Small Business Jobs Act enacted on September 27, 2010 includes an assortment of incentives and tax breaks for small businesses. The following is a brief overview of some of the key provisions included in the new law. Watch for additional details in future newsletters. Click here to download the full newsletter. (PDF)

If you use independent contractors to perform services for your business or rental and you pay them $600 or more for the year, you are required to issue them a Form 1099 after the end of the year to avoid facing the loss of the deduction for their labor and expenses, and to avoid a monetary penalty.  (This requirement generally does not apply for payments made in 2011 to a corporation.) (more…)

The Internal Revenue Service has issued the 2011 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

Beginning on Jan. 1, 2011, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

• 51 cents per mile for business miles driven (includes a 22 cent per mile allocation for depreciation);
• 19 cents per mile driven for medical or moving purposes; and
• 14 cents per mile driven in service of charitable organizations. (more…)

If you use independent contractors to perform services for your business and you pay them $600 or more for the year, you are required to issue them a Form 1099 after the end of the year to avoid facing the loss of the deduction for their labor and expenses, and to avoid a monetary penalty.  The 1099s for 2010 must be provided to the independent contractor no later than January 31, 2011. (more…)

Advance earned income credit has been repealed for 2011. This credit allowed certain low-income employees to receive an advance payment of the earned income credit in their paychecks. Their withholding was lowered to take into account the payment. However, employers are cautioned that the advance earned income credit has been repealed beginning with the 2011 tax year.  Therefore, they must stop the advance EIC credit payments effective for payroll payable in 2011.

Are You Ready?

If you’re like most taxpayers, you find yourself with an ominous stack of “homework” around TAX TIME! Unfortunately, the job of pulling together the records for your tax appointment is never easy, but the effort usually pays off when it comes to the extra tax you save! When you arrive at your appointment fully prepared, you’ll have more time to: (more…)

As part of the new tax cuts for 2011, the Social Security (OASDI) payroll tax withholding for employees has been cut by a full 2 percentage points from 6.2 percent to 4.2 percent of wages paid. 

This late action has created problems for both the IRS and employers in implementing this last minute change.  The IRS recently issued guidance to employers: (more…)

The Bush era tax cuts slowly phased out the federal estate tax and abolished it altogether for decedents dying in 2010, and replaced it with a rather complicated modified carryover basis regime.  Just about everyone assumed Congress would reinstate the estate tax for 2010.  As the year wore on, opinions began to change to where just about everyone predicted Congress would not reinstate the estate tax for 2010.  Then out of the blue, mixed in with the GOP/Obama Administration compromise agreement tax provisions, was a proposal to retroactively reinstate the estate tax with a $5 million per person exemption and a tax rate of 35%. (more…)

Congress, in an eleventh-hour compromise agreement worked out with the Obama Administration and the GOP Leadership, has extended many of the Bush era tax reductions.  The following is an overview of the more frequently encountered tax changes that will have an effect on just about every taxpayer.

INDIVIDUAL PROVISIONS

Individual Tax Rates – Under the Bush era tax cuts, the individual tax rates were reduced and replaced with six tax brackets that increase with income: 10, 15, 25, 28, 33, and 35 percent.  These reduced rates were scheduled to return to their original levels of 15, 28, 31, 36, and 39.6 percent beginning in 2011.  That would have resulted in the lowest bracket increasing by 5 percentage points and the highest bracket 3.6 percentage points, affecting all taxpayers from the low- to the high-income.  Congress has extended the lower rates for two additional years, through the end of 2012. (more…)