ABC Taxes, Tips & Tools

Sen­ate tax-writers are work­ing hard on tax pro­pos­als. One item would spur hir­ing by grant­ing an exemp­tion for Social Secu­rity taxes for each new worker hired in 2010 who had been unem­ployed for at least 60 days (employ­ers would still owe the medicare tax).  In another item, sec­tion 179 would con­tinue at the $250,000 level.  Another exten­sion of the COBRA sub­sidy law is being con­sid­ered and would include work­ers who are reduced in hours and then ter­mi­nated.  Pen­sion plan spon­sors would get relief to avoid big hikes in con­tri­bu­tions to under­funded plans.  Some expired tax pro­vi­sions could be revived through 2010: tax free sta­tus for IRA dis­tri­b­u­tions made directly to char­i­ties, add-on stan­dard deduc­tion for state and local prop­erty taxes, state sales tax tax-break, col­lege tuition, teacher’s school sup­plies, 15-year write-offs for lease­hold improve­ments, and the R&D credit also could be revived.

How­ever, even though con­gress says the estate tax will be revived and retro-active to Jan­u­ary 1, there is no bipar­ti­san con­sen­sus on where to set the exempt amount and the tax rate.  If no action is taken the 2011 exempt amount will fall to $1 mil­lion dol­lars and the top estate tax rate could be 60%, which is a far worse sce­nario than either side wants.

There is also the President’s well pub­li­cized desire to remove tax cuts for “wealthy” indi­vid­u­als (those earn­ing more than $250,000) and higher cap­i­tal gains tax rates, but there are other less well pub­li­cized items under Obama’s plan; he would like to see Cor­po­ra­tions get­ting 1099-MISCs for ser­vices per­formed (mean­ing they are tax rev­enue tar­get) and he would like to end the use of Last In First Out (LIFO) and Lower of Cost or Mar­ket Inven­tory Methods.

Of course this doesn’t mean we will see any of this leg­is­la­tion passed or passed soon.  In the last few years, patches have been late in com­ing, but Art & Busi­ness Con­sult­ing will strive to stay on top of these issues.

As always, small busi­ness ser­vices and tax­a­tion are our busi­ness, if you need help with busi­ness or indi­vid­ual taxes, Please give Art & Busi­ness Con­sult­ing a call.  We would love to engage you as a client.

The usual dis­claimers: Although ABC has made every effort to insure the accu­racy of Taxes, Tips and Tools, mis­in­for­ma­tion, dis­in­for­ma­tion, changes, mis­takes, typos and hack­ers hap­pen, there­fore Art & Busi­ness Con­sult­ing LLC takes no respon­si­bil­ity for any action taken or results based on the infor­ma­tion sup­plied here in.  Inter­nal Rev­enue Ser­vice Cir­cu­lar 230 Dis­clo­sure:  As pro­vided for in Trea­sury reg­u­la­tions, advice (if any) relat­ing to fed­eral taxes that is con­tained in this com­mu­ni­ca­tion (includ­ing attach­ments) is not intended or writ­ten to be used, and can­not be used for the pur­pose of (1) avoid­ing penal­ties under the Inter­nal Rev­enue Code or (2) pro­mot­ing, mar­ket­ing or rec­om­mend­ing to another party any plan or arrange­ment address herein.  Art & Busi­ness Con­sult­ing LLC cur­rently does not have a cer­ti­fied pub­lic accoun­tant or an attor­ney on staff; this infor­ma­tion is purely for edu­ca­tional pur­poses and not to be con­strued as legal or finan­cial advice.  Art & Busi­ness Con­sult­ing LLC and its employ­ees, mem­bers and asso­ciates are not engage to prac­tice law; you always should dis­cuss legal mat­ters with your attor­ney before talk­ing to any­one else.