Hurricane Sandy and Employers

As you are aware, Hurricane Sandy left a path of devastation across the East Coast. The IRS has provided an interesting way to help those affected rebuild.

If you are an employer, you may offer for your employees to donate their paid-time-off (sick, vacation, etc.) to a charity working in the area, from now until January 1, 2014.

Here’s how it would work:

Employee designates how many hours of leave they’d like to donate.
That leave would be cashed out directly to the charity.
This transaction would NOT be taxable to the employee (or the employer).
One note, because this is not taxable, the donation is also not tax-deductible to the employee.

If you are an employee, ask your employer if they will participate.

Please let us know if you have any questions. If we are your payroll company, we’d be happy to help you offer this to your employees.

Ref: IRS Notice 2012-69

Business Tax Updates

WA B&O Tax Rate Increase

The B&O Tax Rate for Services has increased from 1.5% to 1.8%, effective May 1, 2010.  Retail and other classifications are not affected.

HIRE Act – Incentives for hiring

There are two new tax benefits for hiring new “qualified” employees.

A “qualified” employee is:
– Hired between February 3, 2010 and January 1, 2011
– Not employed in the 60 days prior to their hire date
– Not hired to replace another employee (unless that employee had quit or been fired for cause)
– Not related to you

If you have (or intend to) hire a qualified employee, have them complete Form W-11 to certify they had been unemployed.

These employees qualify you for an exemption from the 6.2% employer social security tax on their wages through the end of 2010.

If a qualified employee are retained for at least 52 weeks, you will also be eligible for a credit up to $1,000 on your annual federal tax return.

Health Care Reform

While the Health Care Reform bills are big and involved, I’m just going to highlight a couple of points.

First, employers are not required to provide health insurance coverage.  After 2013, employers with 50 or more full-time employees will be penalized if they do not provide coverage.

In 2010 through 2013, small employers (less than 25 employees with average annual wages under $50,000) will be eligible for a tax credit for up to 35% of the health insurance premiums paid.  (Note, premiums paid from employees’ salary do not count.)

Last, in 2013, individuals earning over $200,000 per year and married filing jointly couples earning over $250,000 per year will start paying an additional .9% Medicare tax and a 3.8% tax on ‘unearned’ income (interest, dividends, rents, royalties, etc.).  While these are not taxes paid by businesses, business owners may need to take these new taxes into consideration when planning.

I hope this information has been helpful.  Please remember these are brief summaries of complex tax laws and should not be relied upon as tax advice.