2009 was a year of change and challenge for U.S. businesses. Taxes rose to bolster state budgets as states confronted looming budget gaps. More than 30 states enacted revenue increases during legislative sessions in 2009, and several state payroll tax changes enacted in 2009 were designed to take effect immediately upon passage.  

Tax topics: Updates for the 2009 tax year

Challenges for employers

2009 was a year of change and challenge for U.S. businesses. Taxes rose to bolster state budgets as states confronted looming budget gaps. More than 30 states enacted revenue increases during legislative sessions in 2009, and several state payroll tax changes enacted in 2009 were designed to take effect immediately upon passage. 

"Every day seems to bring something new," says Bill Volkel, vice president of Ceridian's tax service. "We see impacts to the unemployment insurance wage bases, tax rates, delay in tax rate releases, and the frequent changes to the personal income tax withholding tables for a number of states. The FUTA tax rate reduction has been held off until sometime in 2011 due to issues. New requirements are being identified more frequently with requests for earlier compliance all around." 

Struggling to manage the effects of global economic recession, organizations came face-to-face with the reality spawned by dynamic political and social shifts: a dramatic increase in regulatory burdens. Three areas in particular are causing headaches: 


Health care reform 
The Affordable Health Care for America Act, the single biggest piece of domestic policy legislation in 45 years, has the potential to overwhelm employers in new and far-reaching HR, payroll and benefits compliance requirements. "While there is no way to predict the final legislation," says Jim O'Connell, executive consultant to Ceridian, "It's very likely that the new law could be the compliance equivalent of the Fair Labor Standards Act (FLSA), the Family & Medical Leave Act (FMLA) and COBRA all rolled into one." 

COBRA subsidy reporting 
A bill passed in the House would extend COBRA continuation rights from the current law (18 months) to the time when a COBRA continuant becomes eligible for coverage under another employer plan, enrolled in Medicare or when the health insurance exchange is up and running in 2013. Human resources, benefits, IT, payroll, accounting and legal departments partner with insurers, third-party administrators and other outside consultants to mitigate the impact of a work environment in which a terminated employee could conceivably remain on COBRA for three years. 

Ceridian helps our clients' employees save money and prepare for the future. Get a discount when Jackson Hewitt files your tax returns. 

 

Considerations for individuals

It has been a roller-coaster year for many American taxpayers -- and times of change usually mean more complexity in an individual's tax return. The good news: with proper counsel and execution, you might discover some substantive assistance. 

  • A tax credit helps pay for the first four years of college. 
    The new American Opportunity Credit lets more parents and students use a federal education credit to offset part of the cost of college. This credit modifies the existing Hope credit for tax years 2009 and 2010, making it available to a broader range of taxpayers.
  • Many energy improvements qualify for tax credits. 
    People who weatherize their homes or purchase alternative energy equipment may qualify for one of two expanded home energy tax credits: the non-business energy property credit and the residential energy efficient property credit.
  • Purchase incentive for new vehicles. 
    New car buyers can deduct the state or local sales or excise taxes paid on the purchase of new cars, light trucks, motor homes and motorcycles. There is no limit on the number of vehicles that may be purchased, and eligible taxpayers may claim the deduction for taxes paid on multiple purchases. However, the deduction is limited to the tax on up to $49,500 of the purchase price of each qualifying new vehicle.
  • Mileage deductions. 
    The standard mileage rate for business use of a car, van, pickup or panel truck is 55 cents for each mile driven. The standard mileage rate for the cost of operating a vehicle for medical reasons or as part of a deductible move is 24 cents per mile.

 

Discount on TurboTax®
Employees of Ceridian's LifeWorks client companies can receive a 25 percent discount on TurboTax federal tax preparation products. Through LifeWorks Online, eligible employees will have immediate access to the No.1-rated TurboTax software. TurboTax guides taxpayers through their tax returns from start to finish, making it easier than ever for taxpayers to claim every deduction and credit they deserve. Visit LifeWorks Online under Specialty Solutions for details on the discount

Let Ceridian help your employees make quick work of their taxes this year. Intuit and H&R Block are both W-2 download partners, so if W-2 forms are processed by Ceridian, they can be imported directly to either TurboTax (online) or to an H&R Block office or H&R Block's At Home software and online programs

 

Prepare for more challenges in 2010

2010 promises to be a very demanding year for employers. Developments that could have an impact on your business include the following: 

  • Family leave, sick and vacation days. 
    Bills are currently under consideration in Congress that would require employers to provide all employees paid leave or days off.
  • Auto IRA. 
    Current legislation under consideration would require employers that do not offer qualified retirement plans to automatically enroll employees in an IRA starting with a 3 percent payroll deduction.
  • Increased enforcement. From the Internal Revenue Service to U.S. Immigration and Customs Enforcement to the U.S. Department of Labor and beyond, regulators are reinvigorated. It appears penalty abatement requests are being denied more frequently as agencies are more closely following the letter of the law rather than the intent of the law.