Small Business Jobs Act of 2010

On September 27, 2010 the President signed into law the Small Business Jobs Act of 2010. The act includes a few new incentives for both individuals and small businesses. We have outlined some of the more interesting provisions below:

Health Insurance Costs deductible in computing Self-employment Tax – Under prior law, health insurance premiums paid on behalf of a self-employed person and their family was deductible as an above-the-line deduction in computing taxable income, but was not allowed as a deduction against the self-employment tax. Under the new law, Individuals may now deduct the cost of health insurance premiums for themselves, their spouse, and their dependents up to age 26 as a trade or business expense for purposes of computing both income tax and the self-employment tax. There are still certain restrictions, such as the prohibition of the deduction for any month the taxpayer is eligible to participate in a subsidized health plan maintained by their spouse’s employer, and the limitation of the deduction to earned income for the year.

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Help your favorite local charities stay tax-exempt

You can help your favorite local charities or non-profit organizations by telling them about a new law that may affect their exemption from paying federal income taxes.

A few years ago, Congress passed a law requiring all tax-exempt organizations, even the smallest ones, to file an annual return with the Internal Revenue Service. Previsouly any organization with gross receipts less than $25,000 per year was exempt from any filing requirement. Any organization that does not file for three consecutive years automatically loses its federal tax exemption. Churches and some church-related organizations are among the few exceptions.

The first three-year deadline for filing those returns was May 17, 2010. While thousands of organizations did file, a significant number did not. Read more

Two New Hiring Incentives For Employers

Under the Hiring Incentives to Restore Employment (HIRE) Act, two new tax incentives have recently come into effect to help businesses hire new employees. The first incentive is the payroll tax exemption. Employers will not have to pay their 6.2% share of social security tax on wages paid to qualifyied employees from March 19, 2010 to December 31, 2010. A qualified employee is an individual hired after February 3, 2010 and before January 1, 2011 who was unemployed or employed for 40 hours or less during the 60 day period prior to their hire. The employee generally will not qualify for the credit if they are replacing another employee that was terminated without cause or if they are related to the employer. Read more