BUSINESS TAX TIPS
REMEMBER THE NEW HIRE TAX CREDIT FROM 2010
As an employer, you may be able to receive a $1,000 tax credit on your business income tax return for
each employee who qualified for the New Hire Credit last year, as long as the employee is still employed
on their one year anniversary date. To qualify for the $1,000 tax credit the employees’ wages in the
second six months of the year have to be at least 80% of the wages from the first six months of the year.
OHIO MINIMUM WAGE IS INCREASING
Effective January 1, 2012 the Ohio minimum wage for non-tipped employees will be $7.70 per hour. For
tipped employees the minimum wage will be $3.85 per hour plus tips. Employers in Ohio who have
gross sales of less than $283,000 can pay employees at the lower federal minimum wage, which is $7.25
per hour at this time.
IRS INCREASED THE STANDARD BUSINESS MILEAGE RATE
Effective July 1, 2011 the IRS increased the business standard mileage rate from 51 cents to 55.5 cents
per mile. For the first half of the year the old rate is in effect.
OHIO CURRENTLY HAS TWO AMENSTY PROGRAMS AVAILABLE FOR TAXPAYERS
The Use Tax Amnesty is intended to be helpful to Ohio businesses that may be unaware of the use tax or
are behind in meeting use tax obligations. Under this amnesty, businesses not registered for use tax can
pay their past use tax liability without incurring penalties or interest. Use tax was passed into law in the
1930’s as a companion tax to sales tax. In general if you do not pay sales tax on a purchase or service
that otherwise would be subject to sales tax then you should be self-assessing and remitting the use tax
on the purchase to the Ohio Department of Taxation.
The General Tax Amnesty will be available for any business with overdue liabilities in any of the
following taxes: commercial activity (CAT), corporation franchise, sales, motor fuel, cigarette or other
tobacco products and employer withholding.
NEW HEAVY SUVs AND PICKUP TRUCKS GET A BIGGER TAX BREAK IN 2011
You can write off 100% of the cost of a new SUV or pickup truck purchased for your business if no
personal use is made of the vehicle. If there is some personal use the deduction is limited to the
business use of the vehicle. The SUV or pickup truck must have a loaded gross vehicle weight of 6,000
pounds to qualify for this tax break. This tax break is reduced to 50% for 2012 and may go away
completely in 2013. It does not apply to used vehicles.
FORM W-2 REPORTING REQUIREMENTS EASED
Under the Health Care Reform Act employers were originally required to report the value of health
insurance provided to employees on their Forms W-2 beginning with the 2011 W-2 Forms. The IRS
already suspended that reporting for all employers on the 2011 W-2 Forms. The IRS has also suspended
the reporting on 2012 W-2 Forms for employers filing less than 250 W-2 Forms.
SERLE & ASSOCIATES CPA, LLC
BRIMFIELD, OH
330-678-8930
BUSINESS TAX TIPS
EXPANDED FORM 1099 REPORTING RULES REPEALED
The Health Care Reform Act passed in 2010 greatly expanded the Form 1099 reporting requirements
that would have essentially required every business to issue a 1099 to any vendor whom they purchased
any type of property or service from in excess of $600. The Form 1099 Act of 2011 repeals this
expansion of the reporting requirements. Thus, the Form 1099 reporting requirements do not change
after 2011. The Form 1099 Act also repealed the expanded reporting requirements for landlords.
SECTION 179 EXPENSING OF BUSINESS ASSETS
For 2011, you can deduct up to $500,000 of the cost of qualifying property purchased in your business.
Qualifying property consists of tangible personal property and can be new or used. While this deduction
cannot create or increase a net operating loss, the excess can be carried over to future years.
100% BONUS DEPRECIATION FOR ALL OF 2011
Businesses can deduct 100% of the cost of new assets purchased in 2011. This percentage drops to 50%
in 2012. This deduction also applies to land improvements such as parking lots, fencing and irrigation
systems. Unlike Section 179, expensing this deduction can actually take the business into a loss
situation and then carryback the loss to get refunds of prior taxes paid. The deduction does not apply to
used assets.
EMPLOYER PROVIDED iPADS, OTHER TABLETS AND CELL PHONES QUALIFY AS TAX FREE FRINGES
As long as the iPads or other tablets and cell phones are given to employees primarily for business,
personal use will not be taxable. The same applies for employers who reimburse for the usage of
employee-owned iPads or cell phones.
IRS IS OFFERING SOME RELIEF IF YOUR BUSINESS HAS MISCLASSIFIED WORKERS
Employers treating employees as independent contractors continue to be a hot button for the IRS. On
September 21, 2011 the IRS created a new program that allows employers to voluntarily treat
misclassified workers as employees on a going forward basis and pay a reduced penalty. If you think you
may have misclassified some of your workers I would be happy to discuss this issue with you.
THERE IS A NEW FORM 1099 OUT THERE FOR 2011
If your business accepts credit cards from customers then you will likely be receiving a new Form 1099-k
for the credit card sales you made in 2011. I will need the Forms 1099-k you receive so that I may
properly report this income on the correct line on your business tax return and avoid those nasty notices
down the road.
SPECIAL TAX BREAKS FOR THE SOLE PROPRIETOR
If you are a sole proprietor, hiring your spouse can cut your tax bill. The tax savings come from a
medical plan. By offering family coverage to your spouse, you can receive health insurance under your
spouse’s policy. The entire cost of the medical plan can be deducted as a business expense.
No matter what business entity you are, you will likely get a tax break by hiring your children as long as
they can provide services to your business. The wages you pay to the children are fully deductible.
SERLE & ASSOCIATES CPA, LLC
BRIMFIELD, OH
330-678-8930