Work Opportunity credit for certain 2013 new hires can save you tax

If you’re considering expanding your staff, hiring from certain disadvantaged groups before the end of 2013 can save you tax. The American Taxpayer Relief Act of 2012 extended the Work Opportunity credit for hires from most eligible groups through 2013.

Examples of eligible groups include food stamp recipients, ex-felons and nondisabled veterans who’ve been unemployed for four weeks or more, but less than six months. For these groups, the credit generally equals 40% of the first $6,000 of wages paid to qualifying employees, for a maximum credit of $2,400. A larger credit of up to $4,800 is generally available for hiring disabled veterans.
 
If you’re hiring veterans who’ve been unemployed for six months or more in the preceding year, the maximum credits are even greater:

• $5,600 for nondisabled veterans, and
• $9,600 for disabled veterans.

Please contact us for more information on how to qualify for the credit.

Why 2013 may be the year to make that car or boat purchase you’ve been thinking about

For the last several years, taxpayers have been allowed to take an itemized deduction for state and local sales taxes in lieu of state and local income taxes. The American Taxpayer Relief Act of 2012 has extended this break — but only through 2013.

The break can be valuable to those residing in states with no or low income tax rates. But wherever you live, it can be a powerful tax saver if you purchase a major item, such as a car or boat.

With tax reform being discussed and the federal deficit continuing to be a major issue, it’s hard to predict whether the deduction will be extended again. If you’re contemplating a major purchase, you may want to make it in 2013 to ensure the sales tax deduction is available.

Be prepared for the health care act’s “play or pay” provision

The Patient Protection and Affordable Care Act of 2010’s shared responsibility provision, commonly referred to as “play or pay,” is scheduled to take effect Jan. 1, 2014. It doesn’t require employers to provide health care coverage, but it in some cases imposes penalties on larger employers that don’t offer coverage or that provide coverage that is “unaffordable” or that doesn’t provide “minimum value.”

A large employer is one with at least 50 full-time employees, or a combination of full-time and part-time employees that’s “equivalent” to at least 50 full-time employees. The nondeductible penalties generally are $2,000 per full-time employee.

Although the shared responsibility provisions don’t take effect until 2014, employers will use information about the workers they employ in 2013 to determine whether they’re subject to the provisions and face the potential for penalties in 2014. The rules are complex, so contact us today to learn whether you might be subject to penalties and what steps you can take to avoid, or at least minimize, them.