Note: Running Fridays in FromGregsHead.com, is a continuing series of tips brought to you by Greg Price. These run Saturday mornings during the BusinessMaker’s Radio Show on KPRC 950AM. Audio files can be found on the PKF Texas – Entrepreneur’s Playbook® page of the PKF Texas website.
The "Hiring Incentives to Restore Employment Act of 2010," or HIRE Act, enacted earlier this year, included new incentives to encourage hiring.
One incentive for employers under the Act is a $1,000 nonrefundable income tax credit. For each qualifying worker hired under the Act that the employer keeps on payroll for 52 continuous weeks, the employer is eligible for the credit.
The credit is to be taken on the employer’s 2011 income tax return and is limited to the lesser of $1,000 or 6.2% of the wages paid to the retained worker during the 52-consecutive-week period. To be eligible for the credit, the amounts paid must be treated as wages under the Internal Revenue Code, i.e., contract labor amounts would not qualify.
Finally, the Act contained a comprehensive set of measures to increase reporting & compliance of offshore holdings & transactions. A 30% withholding tax will now be imposed on certain income from U.S. financial assets held by a foreign institution.
These provisions will be applicable unless the foreign financial institution agrees to disclose the identity of any U.S. individuals with accounts at the institution. It is expected that foreign financial institutions will comply with these disclosure and reporting requirements in order to avoid paying this withholding tax. These provisions are generally effective for payments made after 2012.
Individual taxpayers will also be required to report offshore accounts and other foreign financial assets with values of $50,000 or more on their tax returns. Failure to make the required disclosures will subject the individuals to a penalty of $10,000 for the tax year. These provisions will apply for tax years beginning after March 18, 2010.
Be sure to speak to your accounting service provider about these timely tax provisions. Tax updates from PKF Texas may be found at www.www.pkftexas.com/taxnews.