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Have you hired anyone off unemployment?

Two New Tax Benefits Aid Employers Who Hire and Retain Unemployed Workers.
Under the Hiring Incentives to Restore Employment (HIRE) Act, two new tax benefits are available to employers who hire workers who were previously unemployed or only working part time.

The first, the payroll tax exemption, provides employers with an exemption from the employers 6.2 percent share of Social Security tax on wages paid to qualifying employees for wages paid from March 19, 2010 through December 31, 2010. The reduced tax withholding will have no effect on the employees future Social Security benefits, and employers would still be required to withhold the employees 6.2 percent share.

The second new tax benefit allows a business to claim an additional general business tax credit, up to $1,000 for each worker who is retained for at least one year, when they file their 2011 income tax return.

The two tax benefits are especially helpful to employers who are adding positions to their payrolls. New hires filling existing positions also qualify but only if the workers are replacing someone who left voluntarily or for cause. Relatives do not qualify for this program. For additional information about the HIRE program check out the IRS Website at http://www.irs.gov/businesses/small/article/0,,id=220745,00.html

Six tips for students with a summer job

School’s out and many students now have a summer job? Some students may not realize they have to pay taxes on their summer income. Here are the six things the IRS wants everyone to know about income earned while working a summer job.

1. All employees fill out a?W-4, Employee’s Witholding Certificate when starting a new job. If you have multiple summer jobs you will want to make sure all your employers are witholding an adequate amount to cover your total tax liability. To make sure your withholding is correct, use the Witholding Calculator on IRS.gov.

2.Whether you are working as a waiter or a camp counselor, you may receive tips as part of your summer income. All tip income is taxable and subject to federal income tax.

3. Many students do odd jobs over the summer to make extra cash.?Earnings you receive from self-employment are subject to income tax. These earnings include income from – baby-sitting and lawn mowing.

4.If you have net earnings of $400 or more from self-employment, you will also have to pay self-employment tax (for Social Security). The self-employment tax is figured on Form 1040, schedule EE.

5.Food and lodging allowance paid to ROTC students participating in advanced training are not taxable. However, active duty pay, is taxable.

6.Special rules apply to services you perform as a newspaper carrier. You are a direct?seller and treated as a self-employed person for federal tax purposes if you meet the following?conditions:

-You are in the business of delivering newspapers

- All your pay for these services directly relates to sales rather than the number of hours worked.

-You perform these services under a written contract which states you will not be treated as a an employee for federal tax purposes.

Generally, newspaper carriers or distributors under age 18 are not subject to self-employment tax.

Our first blog!

Summertime Child Care Expenses May Qualify for a Tax Credit

  1. The cost of day camp may count as an expense towards the child and dependent care credit.
  2. Expenses for overnight camps do not qualify.
  3. If your childcare provider is a sitter at your home or a daycare facility outside the home, you’ll get some tax benefit if you qualify for the credit.
  4. The actual credit can be up to 35 percent of your qualifying expenses, depending upon your income.
  5. You may use up to $3,000 of the unreimbursed expenses paid in a year for one qualifying individual or $6,000 for two or more qualifying individuals to figure the credit.

For more information check out IRS Publication 503, Child and Dependent Care Expenses. This publication is available on the IRS Web site, IRS.gov or by calling 800-TAX-FORM (800-829-3676).