With new laws, comes new documentation...
If you are hiring and plan to take advantage of the tax brakes offered to those who hire a previously unemployed worker, you will need that employee to complete and sign form W-11 (or a statement showing the equivalent). This is part of the new HIRE act passed by Congress recently.

If you thought the tax code was long and arduous enough, Congress would like to inform you that they have added thousands of new pages for you to pour through. While many of the laws in the new health care bill deal with insurance, some have nothing to do with it except they are an effort to pay for the changes by raising taxes. The AICPA and a few other sources have done a noble task of summarizing this mammoth of a tax law change. It offers some benefits to those who are uninsured and small businesses, but it increases many reporting requirements which is not going to sit well with the HR and accounting departments as these are phased in over the next few years.

One change that will effect many but has not been widely publicized...starting in 2012 you have to send anyone who you pay more than $600 to a 1099. Corporations are no longer excluded. This is a major change and is going to create some major paperwork headaches.

High earners (those with income over $250,000) are clearly in the cross-hairs, so if this is you it would be wise to do some planning before this coming tax wave hits.

AICPA

FarmCPA

NY Daily News

Christian Science Monitor

President Obama signed into law today the HIRE Act to help offer some tax benefits to encourage employers to hire the unemployed workers.

From the IRS Website
"WASHINGTON — Two new tax benefits are now available to employers hiring workers who were previously unemployed or only working part time. These provisions are part of the Hiring Incentives to Restore Employment (HIRE) Act enacted into law today.

Employers who hire unemployed workers this year (after Feb. 3, 2010 and before Jan. 1, 2011) may qualify for a 6.2-percent payroll tax incentive, in effect exempting them from their share of Social Security taxes on wages paid to these workers after March 18, 2010. This reduced tax withholding will have no effect on the employee’s future Social Security benefits, and employers would still need to withhold the employee’s 6.2-percent share of Social Security taxes, as well as income taxes. The employer and employee’s shares of Medicare taxes would also still apply to these wages.

In addition, for each worker retained for at least a year, businesses may claim an additional general business tax credit, up to $1,000 per worker, when they file their 2011 income tax returns.

“These tax breaks offer a much-needed boost to employers willing to expand their payrolls, and businesses and nonprofits should keep these benefits in mind as they plan for the year ahead,” said IRS Commissioner Doug Shulman.

The two tax benefits are especially helpful to employers who are adding positions to their payrolls. New hires filling existing positions also qualify but only if the workers they are replacing left voluntarily or for cause. Family members and other relatives do not qualify.

In addition, the new law requires that the employer get a statement from each eligible new hire certifying that he or she was unemployed during the 60 days before beginning work or, alternatively, worked fewer than a total of 40 hours for someone else during the 60-day period. The IRS is currently developing a form employees can use to make the required statement.

Businesses, agricultural employers, tax-exempt organizations and public colleges and universities all qualify to claim the payroll tax benefit for eligible newly-hired employees. Household employers cannot claim this new tax benefit.

Employers claim the payroll tax benefit on the federal employment tax return they file, usually quarterly, with the IRS. Eligible employers will be able to claim the new tax incentive on their revised employment tax form for the second quarter of 2010. Revised forms and further details on these two new tax provisions will be posted on IRS.gov during the next few weeks."

Other provisions in the bill:
One benefit was that it extends the higher section 179 depreciation expenses for 2010 so that it is the same as it was in 2009 ($250,000).

Increased reporting requirements and penalties for failing to report on large foreign investment income.

Link

If you are thinking about hiring a relative, consulte this site to see if you can still qualify for the HIRE credit (it depends on your business structure).

The IRS has created a new 1099 form filing requirement starting in 2011. It is for credit card companies and similar third party payers to report the amount they processed for your business. As long as this filing responsibility is passed on to the credit card issuers, hopefully this will not be a major change for most filers.

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If your employer offers stock options to you as an incentive, be sure to read up on the rules and regulations regarding their exercise and sale. Not doing so could lead to a very costly tax bill. The following articles are helpful in understanding the ins and outs of stock options.

Article 1

Article 2

Clark Howard is reporting good news to those who are unemployed. Benefits are being extended beyond the original deadline, offering more time for people to find employment and get back on their feet.

"There is a new extension of jobless benefits for 99 weeks in select states (These states include Alabama, Arizona, California, Florida, Georgia, Idaho, Illinois, Indiana, Kentucky, Massachusetts, Maine, Michigan, Mississippi, Missouri, Nevada, New Jersey, North Carolina, New York, Ohio, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Washington, Wisconsin and West Virginia.)"

Cobra subsidies are also being extended by one month to March 2010.

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If you run a business that delivers property digitally, you need to be aware of a change in the sales tax code effective 1/1/10. NC now charges sales tax on the download or electronic delivery of software, photos, periodicals, and much more. Check out this press release for more information.

Link