The first major bill of the year was passed in mid March. Driven by the continuing desire to stimulate the economy this bill offers hiring incentives through the “forgiveness” of payroll tax and credits to employers who retain workers for a period of time. The bill also extends the increased Sec. 179 deduction amount through 2010 and increases the standards of discloser for individuals with foreign assets.
If a qualifying individual is hired between February 3rd 2010 and January 1st 2011, the employer will not be required to pay the 6.2% FICA tax through 2010. That could be a payroll tax savings of up to $6,621 for each employee hired. The employee must not have been employed for more than 40 hours during the 60-day period ending on the date the individual begins employment. Also, the qualifying individual cannot displace a current employee. How will this savings benefit small business and employees?
- Possible higher wages for employees
- Employ more workers
Of course the business could just retain the profits or lower prices on goods for sale.
Employees who qualify for the above measure will also generate a tax credit of up to $1,000 if retained for over 52 weeks. Because of the 52-week requirement, employers wont starting seeing this benefit until they file their 2011 tax returns.
The Sec. 179 depreciation credit will be $250,000 for business who place under $800,000 of assets into service in 2010. This is an extension of what was available in 2008. This extra first year depreciation tool is supposed to encourage small business to spend money on placing new assets into service. Remember, in some situations it is not always advantageous to completely depreciation your assets in one year.
One last thing that really stuck out to me was the foreign financial assets disclosure requirement. If the aggregate value of an individual’s foreign financial asset exceeds $50,000, they must disclose information about those assets or face penalties up to $50,000. The value considered is the highest value of the asset during the year, not the value on Dec. 31st. If you have assets overseas, the government wants to know about it!
The incentives for hiring and retaining workers is expected to cost about 4.2 billion in 2010 and 5.6 billion in 2011.
Next up, the Extenders Act..
