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IMPORTANT NEWS

The Temporary Payroll Tax Cut Continuation Act of 2011 temporarily extends the two percentage point payroll tax cut for employees, continuing the reduction of their Social Security tax withholding rate from 6.2 percent to 4.2 percent of wages paid through Feb. 29, 2012.

New York State passed the Marriage Equality Act with effective date of July 24, 2011. Same sex married couples will be required to file their NYS return with joint or married filing separate filing status. To See further details Click here.

  

 

              

 

    

 

 

 

                      

 

UPDATES ON TAX LAW

Veterans Hiring Tax Credit Law signed on 11/21/11

  • Repeals the 3% withholding on government contractors
  • Includes new $ 5600 tax credit for hiring veterans unemployed for at least 6 months
  • Adds a $2400 tax credit for hiring veterans unemployed between 4 weeks and 6 months
  • $ 4800 credit for disabled veterans hired within a year of discharge
  • $9600 credit for hiring veterans with service-related disabilities and unemployed for 6 months or more.

 

Recent tax updates affecting 2011 or 2012

  • A 2 % reduction in employees' share of payroll (social security) tax for 2011
  • Bonus depreciation is 100% for 2011 and back to 50% in 2012
  • Maximum auto depreciation for 2011 is $ 11,060
  • 2011 Estate exclusion is $ 5 million - NYS $ 1 million
  • Businesses who receive payment by credit card may receive a new 1099-k form
  • Brokers are now required to report the cost (basis) of certain security sales. Also, the 1099-B is not due to be issued till 2/15th.
  • Date of birth is now required on the NYS return
  • 2012 Business mileage rate is .555 cents per mile. There are 2 mileage rates for 2011 - .51 cents to 6/30/11 and .555 cents from 7/1/11 to end of year.
  • Credits are available for Solar Energy Property, Fuel Cell Property, Qualified small wind energy, and geothermal heat pump. This applies to property put in service before 2017
  • Energy Efficient Improvements credit - up to $ 500 for 2011. Must be reduced if credits claimed for 2006,2007,2009, and 2010. Maximum if $ 500 for all years. 
  • 2012 Maximum contribution to 401k is $17,000 and if 50 or older a bonus amount of $5500
  • 2012 Maximum contribution to Simple plan is $ 11,500 and if 50 or older a bonus amount of $ 2500.

 

Reid Tax Relief Unemployment Insurance Reauthorization and Job Creation Act of 2010

  • Reduces the Employee share of payroll tax by 2% for Wages paid in 2011. This is for 1 year only.
  • Extend the existing wage brackets and Capital Gains/Dividend rates through 2012.
  • A number of tax deductions due to expire at end of 2009 have been extended through 2011.
  • Estate tax exemption increased to $ 5 million per person and top rate reduced to 35%.
  • 100% Bonus Depreciation for assets placed in service after 9/9/10 through 2011. 50% bonus depreciation is available for 2012.
  • $ 250.00 above the line deduction for teachers extended through 2011.
  • Deduction for state and local sales taxes extended through 2011
  • Above the line deduction for Tuition extended through 2011

       SEE DOCUMENTS PAGE FOR DETAILS OF OTHER CHANGES IN THIS REID TAX ACT

 

Small Business Jobs Act of 2010 signed 9/27/10

  • Extends first year 50% bonus depreciation for qualified property through 12/31/10
  • Depreciation for business use of Autos is increased to $ 11,060 for first year in service. This is effective for 2010 tax year.
  • Deduction for Start up expenses is increased to $ 10,000 for 2010 tax year.
  • For 2010 only, self employed can deduct health insurance premiums for calculation of social security tax.
  • 1099 reporting for Rental of Real Property - Effective for payments after 12/31/10, 1099-Misc reporting has been expanded to include services paid by persons renting real property if amounts to $ 600 or more per year for a payee. This provision was repealed in April 2011.

Patient Protection and Affordable Care Act

  • Small employers may be eligible for the new small employer Health insurance credit for purchase of health insurance for it's employees. This is effective for tax years 2010-2013.
  • Employer's must disclose on W-2's for tax years beginning after 2010, the value of employees health insurance.
  • 1099 reporting changes - effective for payments made after 12/31/11, payments to Corporations are no longer exempt from the 1099 reporting requirements. A trade or business who makes payments of $ 600 or more to a Corporation will be required to issue a 1099-Misc. In addition, the definition of payments required to be reported has been expanded to include all payments for property and other proceeds for both property and services. This means that purchasing anything from a vendor may be reportable - even for merchandise. This provision was repealed in April 2011.

Hiring Incentives to Restore Employment Act

  • Employers who hire workers that were unemployed for at least 60 days may be eligible for a 6.2% payroll tax incentive for employee wages paid from 3/18/10-12/31/10.
  • An Employment tax credit may be available to an employer if the unemployed worker continues to work for the employer for a period of not less than 52 weeks.

 

 

 

Please note: The above tax information is provided based on Berne Tax Service's interpretation of the tax law as of the date this information was posted to this website. A taxpayer should discuss with their tax preparer to determine if they qualify for a specific deduction. Clients of Berne Tax Service can contact richard@bernetax.com for additional information.