It’s August and the children in our area are back in school. As parents, I have to say that my husband and I are glad to hear the school bells ringing again. Research shows that children can lose the equivalent of one month’s knowledge over the summer break. As a result, many teachers spend the first several weeks of the new school year reviewing information students were taught during the previous term.
Students aren’t the only ones who need refresher courses. As adults things around us can change so rapidly that it can be very hard to keep up. This is especially true with many of our tax laws. There are some things that you as a parent or a business owner may have forgotten or may not be aware of. Here are just a few for you to consider.
Child Care Credits
This year’s summertime child care expenses could earn you a credit on your 2010 tax return? That’s great news for parents who paid out that extra expense for someone to keep their little ones (13 and under) for them while school was out. Here are some things from the IRS Summertime Tax Tip 2010-01 to keep in mind.
1. Qualifying children must be 13 years old or younger
2. Day camp expenses are eligible
3. Overnight camps are not
4. Daycare and in-home childcare expenses also qualify
5. Expenses up to $3000 for one child or $6000 for two or more can get you a credit of up to 35% of your qualifying expenses.
6. The credit applies to child care expenses paid throughout the year, not just during the summer months.
Home Buyer Credits
The IRS has extended the completion date for qualifying First-Time Homebuyer and Long-Time Homebuyer credits. Eligible home-buyers who entered into a binding contract before April 30th now have until September 30, 2010 to close on the home. If you did not have a binding contract in place before April 30th, you will not qualify for this credit.
Payroll Taxes
If you are paying contractors to do work for you and you don’t want to be found responsible for making tax deposits on those individuals, you need to issue 1099’s. If the IRS should audit your business and find that 1099’s have not been issued to contractors, depending on the specific situation, the IRS could re-classify those individuals as employees and ask you to write a check for back taxes.
There are specific rules for classifying individuals as contractors. To avoid reclassification, make sure you follow them closely. The general rule is that an individual is considered to be in independent contractor if you, as the commissioning party can only control the end result of the work and not how the work is performed.
Unemployment
Did you know that expenses related to searching for employment may be deductible? If the job searcher itemizes his deductions, he may be able to claim job search expenses that exceed 2% of adjusted gross income. For someone who has been unemployed for a long period of time, this deduction could be very helpful.
The down side to this is that it does not apply to recent college grads looking for their first job or for individuals seeking a new line of work. You must have been previously employed and seeking employment in your current line of work.
Businesses who hire individuals who have been unemployed for at least 60 days prior or who worked less than 40 hours during that 60 day period may be eligible for a 6.2% payroll tax incentive on wages paid to these workers after March 18, 2010. To qualify the new employees should be hired between February 3, 2010 and January 1, 2011. Individuals filling existing positions are eligible if the previous employee left voluntarily or was dismissed for cause. If the new employees stay with the business for at least one year, the business is also eligible for a credit of up to $1000 per employee when the 2011 tax returns are filed.
There’s always something new to learn. We’ve chosen to share just a few of the changes to the tax laws that may affect you. For more information, you can visit the IRS website at www.irs.gov.
Students aren’t the only ones who need refresher courses. As adults things around us can change so rapidly that it can be very hard to keep up. This is especially true with many of our tax laws. There are some things that you as a parent or a business owner may have forgotten or may not be aware of. Here are just a few for you to consider.
The IRS has extended the completion date for qualifying First-Time Homebuyer and Long-Time Homebuyer credits. Eligible home-buyers who entered into a binding contract before April 30th now have until September 30, 2010 to close on the home. If you did not have a binding contract in place before April 30th, you will not qualify for this credit.
If you are paying contractors to do work for you and you don’t want to be found responsible for making tax deposits on those individuals, you need to issue 1099’s. If the IRS should audit your business and find that 1099’s have not been issued to contractors, depending on the specific situation, the IRS could re-classify those individuals as employees and ask you to write a check for back taxes. 
Businesses who hire individuals who have been unemployed for at least 60 days prior or who worked less than 40 hours during that 60 day period may be eligible for a 6.2% payroll tax incentive on wages paid to these workers after March 18, 2010. To qualify the new employees should be hired between February 3, 2010 and January 1, 2011. Individuals filling existing positions are eligible if the previous employee left voluntarily or was dismissed for cause. If the new employees stay with the business for at least one year, the business is also eligible for a credit of up to $1000 per employee when the 2011 tax returns are filed. 