2011 Tax Law Changes - Healthcare Reform, HIRE Act will have impact

On Tuesday, December 7, 2010, Jim Ritts of Rubin Brown went through many of the 2011 tax law changes that will impact nfp's in 2011. Here are some highlights (1-3 are from the Healthcare Reform Act; 4-5 are from the HIRE Act of 2010):

1. Small-sized nfp's might benefit from the Healthcare Reform tax credit of up to 25% of the cost of premiums. The credit is available to nfp's through a refundable tax credit filed with the IRS by the 990T form.
2. Employers will want to think about voluntarily reporting the value of health care coverage provided to employees on 2011 W-2's as a trial run, because the reporting will be mandatory for 2012 W-2's.
3. Another 2012 filing requirement that might be wise to prepare for in 2011 is with 1099 forms. Beginning in 2012, all businesses must issue 1099 forms to report purchases of goods or services of $600 or more. So nfp's may want to boost up W-9 collection during 2011 so that the 2012 1099 filing goes easier.
4. Any nfp hiring new employees in 2011 will want to check if the Work Opportunity Tax Credit (providing 40% of qualified wages for certain individuals of up to $6,000 per year for maximum credit of $2,400), is in effect for 2011 hiring.
5. Any nfp hiring new employees in 2011 will want to check if the Payroll Tax Holiday is extended into 2011. The tax holiday provides relief from the 6.2% FICA tax of wages up to $106,800 (maximum credit $6,622).