IRS employment updates that may impact physician practices

HIRE Act Payroll Tax Exemption: Following changes by the HIRE Act signed by President Obama on 3/18/10, employers hiring unemployed workers after 2/3/10 and before 1/1/11 may qualify for a 6.2% payroll tax incentive, in effect exempting them from their share of the Social Security tax on wages paid to these workers after 3/18/10. The employee's 6.2% share of Social Security tax, as well as the employer and employee share of Medicare tax, still apply to the wages. A revised Form 941 (Employer's Quarterly Federal Tax Return) and instructions, to be used in claiming the exemption beginning with the second calendar quarter of 2010, are now available on www.irs.gov . The IRS also updated its series of Frequently Asked Questions (FAQs) on the HIRE Act payroll tax exemption—click on www.irs.gov/businesses/small/article/0,,id=220750,00.html  

Small Business Healthcare Tax Credit: The IRS posted detailed guidance for eligible small employers purchasing employee health insurance, which describes the steps for claiming the credit made available in 2010 under the Patient Protection and Affordable Care Act. The steps include (1) determining the employees to be taken into account, (2) determining the hours of service performed, (3) calculating the number of Full-time Equivalent Employees (FTEs), (4) determining average annual wages paid per FTE, and (5) determining the premiums paid that are taken into account. The notice clarifies that state credits and subsidies for health insurance do not reduce the amount of the Section 45R credit available. In addition, the credit can be reflected in determining estimated tax payments for the year and can be used to offset AMT liability, subject to certain limitations.

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Reed Tinsley CPA

This article is written by Reed Tinsley, a Houston, TX-based CPA with over 30 years of experience advising physicians and medical practices across Texas and the United States. Reed holds certifications as a Certified Valuation Analyst (CVA), Certified Healthcare Business Consultant (CHBC), and Certified Financial Planner (CFP), specializing exclusively in the healthcare sector. He is a published author, nationally recognized speaker, and trusted advisor to physicians on accounting & tax, practice management, and financial planning. Schedule a Free Consultation.