Sandoval Signpost

An Independent Monthly Newspaper Serving the Community since 1988


Bernalillo announces employment opportunities

The Town of Bernalillo is accepting résumés and applications for the following positions:

• Lifeguards (seasonal)
• Maintenance worker
• Park maintenance (seasonal)
• Public works director
• Recreation aide (seasonal)

Certain positions will remain open until filled. To apply or to obtain more information on qualifications, contact Yolanda Mora, Director of Human Resources, at (505) 771-7112.

What the government's stimulus bill means to you

—Jason Alderman

The 2009 economic stimulus bill President Barak Obama signed into law on February 17, 2009, is a whopper, not only in cost ($787 billion) and length (1,070 pages), but also in terms of the vast number of spending and tax-relief programs it touches – everything from multi-billion dollar infrastructure investments to business tax cuts to small increases in unemployment benefits.

Some provisions will take years to trickle down; others take effect almost immediately. Here are highlights of a few programs that could impact you directly:

Payroll tax credit. Workers will receive $400 tax credits for both 2009 and 2010 ($800 for married couples, filing jointly). Unlike last year's tax rebates that were distributed in lump sums, these credits will probably appear as reduced tax withholding on paychecks, starting around June.

Credits gradually phase out for individuals with annual adjusted gross income (AGI) over $75,000 ($150,000 for married couples). Self-employed people can claim their credit when filing 2009 tax returns; but in the meantime they can reduce remaining 2009 estimated tax payments accordingly.

Tax credit for retirees. Those receiving Social Security, railroad retirement benefits, veteran's benefits and government retiree benefits will get one-time $250 payments, beginning in May.

 Unemployment relief. Unemployment insurance benefits increase by $25 a week and eligibility is extended to 46 weeks. The first $2,400 in 2009 benefits is not subject to federal income tax. Also, food stamp payments to low-income families are increasing by 13.6 percent.

Health insurance. For those laid off between September 1, 2008, and December 31, 2009, who retain their former employer's health insurance plan through COBRA, the government will pay 65 percent of the cost for up to nine months. Don't worry if you didn't elect COBRA before the bill passed; your former employer must notify you of your eligibility and you'll then have up to 60 days to enroll for coverage that will take effect as of March 1, 2009.

Home purchases. First-time homebuyers qualify for a tax credit of up to $8,000 on homes purchased between January 1, 2009, and December 1, 2009 (note: not December 31), gradually phasing out for those with AGI over $75,000 ($150,000/married). Unlike last year's homebuyer credit, this one doesn't have to be repaid over 15 years, although you will forfeit the credit and have to pay it back if you sell your home within three years.

New car buyers. If you buy a new (not used) car, light truck, RV or motorcycle between February 17, 2009, and December 31, 2009, you can deduct state and local sales and excise taxes on up to the first $49,500 of purchase price. This "above-the-line" deduction (meaning you can take it even if you don't itemize deductions) gradually phases out for AGI over $125,000 ($250,000/married).

Child tax credit. The income threshold to qualify for claiming the child tax credit on federal income taxes is being lowered in 2009 and 2010 from $8,500 to $3,000. This will allow more lower-income families to claim the credit, which is worth up to $1,000 per child.

Energy-efficient home improvements. The tax credit for making certain energy-efficient improvements to existing homes (such as central air conditioning, furnaces, windows, water heaters) increases from 10 percent to 30 percent for 2009 and 2010, up to a maximum of $1,500.

It's probably a good idea to consult with your tax preparer or a financial advisor to make sure you're taking full advantage of these new tax breaks.

   Jason Alderman directs Visa's financial education programs.

IRS eyes independent contractors

—Dan Danner

It’s often been said that the only things certain in life are death and taxes. While people dream that medical science may one day whip death, few express the same hope about taxes.

Everyone is, of course, expected to pay their fair share of taxes, small business owners included. These days, with the economy in the shape it’s in, governments at all levels are looking harder and harder at who’s paying—or not, as the case may be.

Toward that end, the head of the U.S. Justice Department’s Tax Division has warned tax attorneys that the IRS and the Department of Justice (DOJ) intend to aggressively pursue unpaid employment taxes owed by business owners. The department claims that some employers are ripping off the IRS, using schemes that make them easy targets for enforcement. In addition to civil methods to recover unpaid employment taxes, DOJ indicated it will ramp up criminal enforcement as well.

Small businesses, like all employers, are required by law to withhold federal income, Social Security, and Medicare taxes, as well as federal unemployment taxes. These are pay-as-you-go taxes, meaning employers can’t fall behind on payments. However, the IRS suspects some owners are tempted to avoid these taxes through a variety of schemes, including paying cash under the table, filing false payroll tax returns, or simply failing to file any payroll tax returns.

But one practice is drawing particular scrutiny from the IRS—the use of independent contractors. Many small businesses, such as those involved in construction, delivery services, computer services, cleaning services, home care workers, and agricultural and/or food processing, use independent contractors rather than full- or part-time employees. It’s a perfectly legal practice that makes sense for a number of businesses, especially in the early stages.

The independent contractor relationship can be good for both the employer and the worker. It helps small business owners, especially those in seasonal businesses or those vulnerable to economic ups and downs, to manage variable workloads.

Also, many workers like the freedoms that come along with this kind of working relationship. And since owners can’t keep fulltime workers—with all the benefits that entails—during slow periods, eliminating the independent contractor likely would result in fewer available jobs.

The IRS, though, suspects that there is abuse, especially as employers seek to cut costs in the current economy, and that small businesses are misclassifying employees as contractors.

In many cases, it’s not intentional. The IRS test for classifying employees versus independent contractors has become more and more complex. To make matters worse for the small business owner, states are now considering the same issues, as pressure to balance budgets drives state governments to look for ways to maximize revenues.

Small business owners need to understand that the test of who is an employee and who qualifies as an independent contractor is not a hard and fast set of rules. Rather, the IRS uses twenty questions to weigh the existence of certain factors that indicate a level of control against those factors that show independence.

In other words, an employer-employee relationship exists when the small business owner controls, or has the right to control, the worker performing the services, the result of the work, and also the means by which the result is accomplished. An independent contractor relationship exists when the worker independently performs services outside of the business’s control.

It sounds simple, but like anything else connected to the tax code, it’s not. Small business owners who use, or are considering using, independent contractors should look for the proverbial ounce of prevention from their tax professional, or visit the IRS website covering independent contractors.

Dan Danner is president and CEO of the National Federation of Independent Business in Washington, DC.






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