Update on the HIRE Act
June 9, 2010 | 
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With summer upon us, employers are wondering about the HIRE Act and credit eligibility for both seasonal workers and recent college graduates.
SEASONAL WORKERS and RECENT COLLEGE GRADUATES do qualify employers for the HIRE tax credits assuming all other criteria are met. See our March article for information.
Questions?
Retired and Thinking of Relocating?
June 1, 2010 | Subscribe to our RSS Feed
When a person retires, he or she may decide to move to another state for a variety of reasons, such as living in a warmer climate, being closer to children or other relatives, avoiding state income tax, or health reasons.
If the retiree’s move is permanent, it is important that legal domicile be established in the new state. (The exact definition of domicile varies from state to state. In general, domicile is the individual’s true, fixed, and permanent home and the place to which the individual intends to return, even while residing elsewhere. A person may have more than one residence, but can have only one domicile.)
If domicile is not established, the retiree may be subject to income tax as a resident of both the old and new states. Furthermore, if the retiree dies without establishing domicile, both the old and the new states may claim jurisdiction over the retiree’s estate. However, since each state has its own rules relating to residence and domicile, both states may try to impose their income taxes on the retiree even if he has established domicile in the new state, but has not relinquished domicile in the previous state to its satisfaction.
The more time that elapses after the move and the more steps the retiree takes to establish domicile in the new state, the more difficult it will be for the old state to assert that the retiree resides or has domicile there.
The following list includes some steps that tend to establish domicile in a new state:
- Register to vote in the new location.
- File a change of address form with the post office at the old location and change the address on documents, such as tax returns, wills, contracts, insurance policies, passports, and living trust agreements.
- Obtain a driver’s license and register automobiles in the new location.
- Open and use bank accounts in the new location.
- Move items from safe-deposit boxes in the old location to the new location.
- Purchase or lease a residence in the new state. Sell residence in the old state.
- If an income tax return is required, file a resident return in the new state and a nonresident return (or no return, if appropriate) in the old state.
- File for property tax relief under a homestead exemption (if any) in the new state. (The homestead exemption will be discussed later.)
- Move all items that make a house a home such as mementos, heirlooms, sentimental items, trophies, collections, furniture, etc. to the new state.
Submitted by Sam Cohen
Questions?
How To: Maximize Profitability and Reduce Costs
May 7, 2010 | Subscribe to our RSS Feed
GJ Tax Manager Jeff Cohen authored an article on Cost Reduction in the May 7th edition of the “Baltimore Business Journal.”
Jeff is our resident expert on spend management best practices, including personal property tax recovery and reduction, sales/use tax recovery and reduction and accounts payable auditing.
Read the full article here: Cost_reduction
Glass Jacobson is a charter member of the Center For Spend Management Excellence (CSME), dedicated to innovating best practices for cost reduction, educating the community on the science of spend management, and helping companies save money on line items such as shipping, telephone, marketing and advertising, energy and office supplies.
Maryland’s Job Creation Tax Credit
April 29, 2010 | Subscribe to our RSS Feed
Maryland businesses that hire workers for newly-created or vacant positions may be entitled to a Maryland tax credit (on top of the federal HIRE credit). The amount of the tax credit is based on the number of employees hired and their tenure.
The tax credit may be taken against corporate income tax or personal income tax. The same credit may not, however, be applied to more than one tax type.
To qualify for the Maryland tax credit:
All employees must be Maryland residents hired between March 25, 2010 and December 31, 2010. At the time of hire, individuals must be receiving unemployment insurance benefits or have exhausted their benefits in the previous 12 months and not working full-time immediately preceding the date of hire.
The new jobs must be:
- full-time;
- jobs that require an employee to be employed without interruption for 12 months or more;
- located in Maryland; and
- newly created or have been vacant for at least 6 months.
The business must certify each employee with The Department of Labor, Licensing and Regulation (DLLR) by submitting an online application.
How the tax credit is calculated:
The credit allowed depends on the number of months the employee was in the position. The credit is $5,000 multiplied by the number of employees hired by the employer between March 25, 2010 and December 31, 2010.
The amount of credit that may be claimed in each year is prorated based on the number of employees and number of months employed during the businesses’ taxable year. Employers will multiply $416.67 by the number of months an employee was employed during that year and claim that amount on their return.
The total tax credit cannot exceed $250,000 for any employer under this program. The amount in excess of the state tax liability may be refunded. The total amount of credits approved by DLLR each year is limited; initial credit certificates will be issued on a first-come-first-served basis.
For more information, visit http://www.dllr.state.md.us/taxcredit/jcrtcflyer.pdf
Submitted by Tammy Schneider
Questions?
tammy.schneider@glassjacobson.com
Small Businesses and Health Care Reform
April 27, 2010 | Subscribe to our RSS Feed
For owners of small businesses and their workers, the recently enacted health care reform legislation may be causing some anxiety. Here are some key provisions to pay attention to:
- TAX CREDITS- The new law provides small employers with a tax credit for non-elective contributions to purchase health insurance for their employees.
- To qualify, a business my offer health insurance to its employees as part of their compensation and contribute at least half of the total premium cost.
- The business must have no more than 25 full-time employees (FTEs), and the employees must have annual full-time equivalent wages that average no more than $50,000.
- The credit is initially available for any tax year beginning in 2010, 2011, 2012, or 2013.
- CALCULATING THE CREDIT- For tax years beginning in 2010, 2011, 2012 or 2013, the credit is generally 35% or the employer’s nonelective contributions toward the employees’ health insurance premiums. The credit phases out as firm-size and average wages increase.
- PENALTIES- Although the new law imposes penalties on certain businesses for not providing coverage to their employees (“pay or play”), most small businesses won’t have to worry about this provision because employers with fewer than 50 employees aren’t subject to the “pay or play” penalty.
- THE “CADILLAC TAX”?- The new law places an excise tax on high-cost employer sponsored health coverage. This is a 40% tax on insurance companies, based on premiums that exceed certain amounts. The tax is not on employers themselves, but it is expected that employers and workers will ultimately bear this tax in the form of higher premiums passed on by insurers. This new tax applies to tax years beginning after Dec. 31, 2017.
We will provide more information as it comes to us.
Questions?
sarah.sedlak@glassjacobson.com
Our friend Matthew Cohen of M&T Bank compiled this information. Contact Matt: matt.cohen@mtb.com