Subcontractors Association of the Metroplex

1. Subcontractors Association of the Metroplex Three Financial Things to do Before Year End

2. Three Financial Things to do Before Year End “Opportunities multiply as they are seized.” SunTzu “Work begats work.” Marcia Gay Harden “The will to win is important, but the will to prepare is vital.” Joe Paterno

3. Consider Tax Planning • In 2010, the most tax law changes since 1986 • Overriding Themes • Tax breaks are temporary • “User fees” and penalties - not tax increases • Information gathering

4. HIRE Act of 2010 • Payroll tax holiday through 2010 for long unemployed workers • Work Opportunity Credit for unemployed veterans, disconnected youth and other target groups • Retained worker credit • Increased Sec 179 expensing for fixed assets to $250,000 for 2010 • Accelerated estimated tax payments for large ($1 billion assets) corporations • Increased reporting for foreign financial assets

5. Small Business Jobs Act of 2010 • Self-employeds’ health insurance costs for self and family are deductible for 2010 self-employment taxes • Cell phones are no longer “listed property”

6. Small Business Jobs Act of 2010 • Retirement Planning Incentives and Revenue Raisers • Information return penalties increased • Failure to provide statement penalties increased • Sourcing Guarantee income • No pre-levy Collection Due Process IRS hearing required for certain federal contractors • Accelerated 2015 estimated tax payments for large ($1 billion assets) corporations

7. 2010 Tax Relief Act • Two year Sunset Relief • Reduced individual tax rates extended through 2012 • Reduced estate and trust tax rates extended through 2012 • Withholding and other tax rates remain unchanged through 2012 • Increased standard deduction amounts extended through 2012

8. 2010 Tax Relief Act • Two year Sunset Relief • No 3%/80% limitations on itemized deductions through 2012 • No phase-out of personal exemptions through 2012 • Reduced capital gains and qualified dividends rates extended through 2012 • Expanded child tax credit extended through 2012 • Expanded earned income tax credit extended through 2012

9. 2010 Tax Relief Act • Two year Sunset Relief • Expanded adoption credit and adoption assistance extended through 2012 • Expanded employer-provided childcare tax credit extended through 2012 • Expanded dependent care tax credit extended through 2012 • Numerous education incentives extended through 2012

10. 2010 Tax Relief Act • Two year Sunset Relief • Increased AMT exemption amounts through 2011 • Personal nonrefundable credits may offset AMT and regular tax for through 2011 • Repeal of collapsible corporation rules extended through 2012

11. 2010 Tax Relief Act • Economic Stimuli • Bonus depreciation extended/increased through 2011 • First year depreciation cap for passenger autos increased by $8,000 through 2012 • Choice to forego bonus depreciation and claim credits instead extended through 2011 • Increased Sec 179 expensing limit for fixed assets to $125,000 for 2012 (decrease from $500,000 for 2010 and 2011

12. 2010 Tax Relief Act • Economic Stimuli • Reduced employee FICA tax rate by 2% for 2011. Similar reduction for self-employeds for 2011.

13. 2010 Tax Relief Act • Tax Breaks for Individuals Reinstated • Above-the-line deduction for educator expenses extended through 2011 • State and local sales tax deduction extended through 2011 • Liberalized qualified conservation contributions extended through 2011 • Above-the-line deduction for higher education expenses extended through 2011

14. 2010 Tax Relief Act • Energy and Disaster Relief Provisions Extended • Nonbusiness energy property credit extended through 2011 • Energy efficient new home credit extended through 2011 • Biodiesel tax credits extended through 2011 • Biodiesel mixture excise credits extended through 2011 • Biodiesel mixture excise tax refund provisions extended through 2011

15. 2010 Tax Relief Act • Energy and Disaster Relief Provisions Extended • Suspension of income limitations on percentage depletion for marginal wells extended through 2011 • Start-of-construction deadline to receive grants for specified energy property in lieu of tax credits extended through 2011 • Alcohol fuels tax credit extended through 2011 • Reduced credit for ethanol blenders extended through 2011

16. Consider Financial Reporting • Review debt covenants, coverage ratios, net capital requirements, liquidity ratios. • Financial statements for banks/bonding may be different than financial info for tax return. • Generally, the differences between book and tax are timing differences.

17. Consider Protecting Positions • Worker classification • Documentation of relationships and responsibilities • 20 factors for determining independent contractor vs. employee • Issue 1099s

18. Consider Protecting Positions • Sales Tax • Avoid nexus in other states • Who is doing what and where • Internet sales • Opinion - Before we consider a national sales tax, we might want to take a hard look at what happens on the state level

19. Three Financial Things to do Before Year End • Really Easy Questions? • OR: • OU -14 ATM • UT -14.5 TT • ALA -4.5 LSU • OSU -21 KSU