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BE A HERO - Hire a Veteran and Receive a Tax Credit for Doing so
Recently a new law was passed that expands the Work Opportunity Tax Credit (WOTC) to businesses as well as tax-exempt organizations that hire eligible unemployed veterans. The credit is available for eligible unemployed veterans who begin work on or after November 22, 2011, and before January 1, 2013. The tax credit can range from $1560 to $9600 for qualified veterans. Generally, a "qualified veteran" is a veteran who has been certified by a designated local agency as falling within one of four categories. For tax-exempt employers, the qualified veteran must be performing services in furtherance of the exempt purposes of that employer. Employers need to be aware that there are strict 28-day filing requirements for obtaining proper certification that a new hire meets WOTC eligibility. If you have questions regarding this topic, please do not hesitate to contact our office.
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Get ready for new Medicare taxes
 Beginning in 2013, higher-income taxpayers are scheduled to be subject to additional Medicare taxes, including a 3.8% tax on investment income. This is a dramatic departure from current Medicare taxes, which are limited to wages and self-employment income. This article explains how the new taxes will work, and defines what will and what won’t constitute investment income. It also lists strategies for reducing or eliminating the new tax. One sidebar notes that, in many cases, the taxes will have a bigger impact on married couples than on single taxpayers. Another sidebar offers a table showing how income and capital gains tax rates will change in 2013.
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3 essential estate planning strategies not to be ignored
 This article discusses three essential estate planning strategies: taking advantage of the annual gift tax exclusion; using an irrevocable life insurance trust (ILIT) to buy and hold one’s life insurance policy; and placing assets in a credit shelter trust.
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S corporation shareholder-employees: Are your salaries high enough?
 Because S corporation shareholder-employees aren’t subject to self-employment taxes on their share of the corporation’s income, minimizing their salaries and maximizing income distributed to them in the form of dividends can save significant payroll taxes. But the IRS casts a wary eye on such salaries. This short article explains what to do to keep salaries reasonable; otherwise, the IRS may recharacterize a portion of dividends as wages and present the company with a bill for unpaid payroll taxes, interest and penalties.
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Tax Tips
 This issue’s “Tax Tips” clarifies ambiguous regulatory language that has created confusion about the early-withdrawal penalty for retirement plan distributions. It shows how a charitable remainder trust can be a powerful investment tool, and why, in this difficult economy, an installment sale might help buyers and sellers close a sale of a business.
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This publication is distributed with the understanding that the author, publisher and distributor are not rendering legal, accounting or other professional advice or opinions on specific facts or matters, and, accordingly, assume no liability whatsoever in connection with its use. ©2011 TXIjf12
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