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2010 Tax Law Changes Special Report June

2010 Tax Law Changes Special Report June

Ratings: (0)|Views: 652|Likes:
Published by Flavia Lovell
When it comes to tax law, most people glaze over at the mere thought of it. The language and legislation is technical. It can seem obscure to even the most astute CPAs and people who write tax software. But what about you? Joe or Jane consumer or small business owner
When it comes to tax law, most people glaze over at the mere thought of it. The language and legislation is technical. It can seem obscure to even the most astute CPAs and people who write tax software. But what about you? Joe or Jane consumer or small business owner

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Published by: Flavia Lovell on Jun 29, 2010
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07/24/2010

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 BOSS Business Services presents
2010 Tax Law Changes
Special Report
As of June 15
th
, 2010
Understanding the 2010 tax law changes and what they mean for you and your small businesswww.BossOffice.com 
When it comes to tax law, most people glaze over at the mere thought of it. The language andlegislation is technical. It can seem obscure to even the most astute CPAs and people who writetax software. But what about you? Joe or Jane consumer or small business owner.If you are like most people, upon hearing of any new tax law changes, you are left with anagging yet all important questions:
So, what does all this mean for me and my small business?
 This report explains just that: the nuts and bolts and hidden language of the recent tax lawchanges. We have laid out a series of real-life examples, in story form, to help you navigate thelegal-speak and apply the 2010 changes to your life and your business. We have also includedother pertinent information beyond 2010 and tables for your reference.Of course, if you have any specific questions or require additional clarification, pleasedon¶t hesitate to ask. We always welcome the opportunity to speak with you. So, without further ado, here is your 2010 Special Report, a parable, courtesy of BOSS Business Services.
 
BOSS Business Services 3225 McLeod Drive Las Vegas, NV 89121 888.969.BOSSwww.BossOffice.com 
2
 
The Scenario
Sally and Ed are married. They are both 42 years old and have two kids together, ages 16 and 12.Sally is a real estate agent and a real estate investor. She has three rentals held inside her LLC, Crain Enterprises. She owns an S Corporation called The Terrace Group, from which she pays herself and two employees. Sally does not provide insurance benefits to her employees. Sheis on Ed¶s policy through his employer.Ed works full-time as an engineer and likes to trade the couple¶s brokerage account in thestock market. Together, Sally and Ed make roughly $150,000/year in W-2 income and break even on everything else.Oh, and one more thing, Sally works out a lot and is pretty hot. Everyone wonders whyshe is married to Ed. Sorry, Ed, but it¶s true.Ed and Sally, of course, are worried that somehow the new 2010 tax laws are going toimpact them. Will they? Let¶s take a look.
HIRE Act
FICA
Tax (otherwise known as Social Security)
Sally¶s businesses are both doing well. Craine Enterprises brings in steady cash flow throughrental income. The Terrace Group has increased its customer base and the revenue is growing.As a result, the workload is becoming unsustainable given the current number of employees.Sally would like someone to help her with all the administrative tasks that she is now doing atnight and on weekends instead of going to her kids¶ recitals and baseball games.Sally wants to hire Brooke, an administrative assistant who has been out of work for the past six months. The salary for the position is $20,000. With her current employees, Sally mustmatch their 7.65% share of the Federal Insurance Contributions Act (FICA) tax. But as a result
 
BOSS Business Services 3225 McLeod Drive Las Vegas, NV 89121 888.969.BOSSwww.BossOffice.com 
3
 
of the
Hiring Incentives to Restore Employment (HIRE) Act
that President Barack Obamasigned into law on March, 18, 2010, the employer portion for Social Security (6.2%) of thisobligation has been waived (there is also a Medicare portion of 1.45% that remains). This makesthe option more enticing to Sally.As a new hire, Brooke would still be obligated to pay the 6.2% Social Security tax on her income, but Sally, as the employer, is off the hook for the federal tax obligation for the look if Sally hired Brooke to start work on July, 1, 2010:
[$20
 ,
000
(annual salary × .
062
(Social Security Portion of the FICA tax) × 18
2/365
(wagesbeginning on July 1,
20
1
0
 , the 18
2
nd 
day of the year)] =
$6 
18 (total payroll tax exemption for Sally through her company, The Terrace Group)
The above formula reflects any new employee hired after February 3, 2010 and earned wagesafter March 18, 2010, when Obama signed the bill into law.(Note: As an employer, Sally still must keep Form W-11 in her files. A W-11 serves as theaffidavit from Brooke stating that she hadn¶t been employed for more than 40 hours during the60 days prior to getting her new job).
Tax 
redit 
Additionally, if Brooke stays employed through The Terrace Group for at least 52 consecutiveweeks, Sally, as the employer, will receive an income tax credit in 2011 of $1,000, or 6.2% of wages paid to Brooke over a 52-week period, whichever is less.

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