There are several tax changes we are keeping our eye on for our own business and for our clients in the next year including estate tax changes and changes due to healthcare reform. One big change due to health care reform that affects everyone is the requirement for businesses to file a 1099 form for any payments of $600 or more made to any corporation in a single year which goes into effect in 2012. This could force many businesses to file hundreds of additional forms. There is pending legislation which would repeal this provision.
However it seems businesses which pay corporations by credit card won’t have to file these 1099 forms. That is because a separate law that goes into effect in 2011 which requires card processors to file reports with the IRS on the amount of credit card payments that businesses receive every year. Therefore, if a small business owner goes into a store and buys $600 worth of goods with a credit card that will already generate a report, so no additional reporting is required.
A positive tax law change signed into law March 18 exempts businesses that hire unemployed workers from the employer’s share of Social Security taxes on wages paid to these workers after March 18. To qualify, these workers must be hired after Feb. 3, 2010, and before Jan. 1, 2011. Businesses also can claim a new hire retention credit of up to $1,000 per worker on their income tax returns if they retain these new workers for at least a year. The Internal Revenue Service also has given small businesses with fewer than 25 full-time-equivalent employees who make, on average, less than $50,000 a year a tax credit. This tax break, created by health care reform, covers up to 35 percent of the employer’s cost of health premiums. The IRS also decided that small businesses can take the tax credit not only for basic health insurance but also for add-on coverage such as dental and vision insurance.
Make sure to discuss these and other tax law changes with your accountant and attorney before 2010 ends.