Business Mileage – from 51 cents to 55.5 cents
Medical/Moving Mileage – from 19 cents to 24.5 cents
Charitable Mileage remains the same at 14 cents

These new rates refelct the increased gas prices this year,  but it means that small business owners ABSOLUTELY must track their mileage on a regular basis in order to properly classify their mileage and be able to take advantage of the increased mileage rates.

Colorado homeowners will get more than $41 million in interest-free loans under the U.S. Department of Housing and Urban Development’s (HUD) Emergency Homeowners’ Loan Program (EHLP). Some people who meet specific criteria may not have to pay the money back.

Housing authorities are expecting a flood of applicants in Colorado. Authorities are only taking pre-applications right now. All those names will go into a lottery. If your name is drawn, you can then apply for the loan program.

Under the program, about 1,000 people in Colorado will get a home loan of up to $50,000 for two years, interest free. To qualify, you have to show your income dropped at least 15 percent due to serious illness or job loss, you have be at least three months behind on your mortgage, and your household income in 2009 had to be less than $93,840.

HUD is dividing $1 billion among 27 states and Puerto Rico and Colorado’s share is $41 million. When the money is spent, the program is over. The program is designed to help people who are at-risk of losing their homes. Colorado has the 10th highest foreclosure rate in the nation.

“The phones are ringing off the hook,” Zachary Urban of the Adams County Housing Authority said. “People are knocking on the door. People are in a very tight spot right now. So, any hope out there is something that they’re rushing to see.”

Supporters of the program say these loans will help the economy by preventing foreclosures.

Some folks won’t even have to pay the money back if they’re in the same financial trouble five years from now.

There are critics who say the program basically amounts to a $50,000 handout. The Wall Street Journal reports some Republicans in the House of Representatives tried to kill the program.

Homeowners have one month to apply. The deadline is July 22.

For more information, visit www.FindEHLP.org or call toll free at 855-FIND-EHLP (346-3345).

Under the reporting requirement, businesses would have been required to issue a Form 1099-MISC to corporations as well as non-corporate entities for the purchase of tangible goods and services over $600. The tax filing requirement did not directly relate to health care but was initially included as a funding measure for the health care bill by reducing un-reported and under-reported income that would otherwise be taxable. However, small firms and self-employed individuals voiced concerns that the requirement would bury them in paperwork.

 In addition, the law also repeals the expanded Form 1099-MISC reporting under the Small Business Jobs Act of 2010 that required individuals who receive rental income from real estate to report rental property expenses on Form 1099-MISC.

The biggest relief for taxpayers is that the Alternative Minimum Tax patch is in place once again for 2010, sparing over 20 million taxpayers from facing a huge surprise bill.  If you’ve paid AMT in the past, you’ll most likely still pay it, but at least millions of new taxpayers won’t be pulled into it.  The “Bush Tax Cuts” have also been extended two years, so tax rates will be staying the same through 2012.  And, the estate tax is going to remain at 35% for amounts over $5 million through 2012.

Working American’s will see another form of tax relief in lower payroll taxes.  Each pay period, workers are forced to pay 6.2% Social Security tax on their first $106,800 of income, which is withheld from their gross pay.  For 2011, this rate drops to 4.2%, so it’s the equivalent of a 2% raise for all working American’s.  I haven’t been able to determine if this applies to self-employed workers as well, but hopefully the details will be hammered out soon.  The last form of benefits applies to the unemployed.  These individuals receive another 13-month extension on their benefits.

There is no doubt that this tax bill is highly favored by the Republican’s and goes against the Democrat’s agenda.  It will actually cost lower-income earners money because they benefited more from last year’s Making Work Pay Credit than they do from the lower taxes.  And, wealthy individuals making $500,000 and up will save almost $4,000 over their last year’s tax bill.  Since some of the provisions, such as the AMT patch, expire at the end of 2010, and others such as the tax cuts expire at the end of 2011, we still don’t have a solid picture of what the future holds.  But, we can still be thankful that our government was able to come together at the 11^th hour and prevent an across the board tax increase!

Let’s talk about who does not need to file the paperwork related to Household Employees.  You are not required to file the paperwork described above if your business hires the individual (obviously, businesses have their own set of paperwork requirements!), or if you hire a business to perform the services, rather than individuals.  You are also not responsible to complete paperwork if the employee is under age 18 and does not perform services full-time, such as a student.

Assuming that you are personally hiring another individual to work in your household, where do you begin?  The process is very similar to a business hiring an employee.  They must complete an I-9 form (to prove eligibility to work in the United States) and a W-4 form (to communicate to you, the employer) how much they would like withheld in taxes.  Then, each time you pay that employee, you should withhold 7.65% from their check to cover their portion of Social Security and Medicare taxes (unless you, as the employer, chose to pay those taxes on the employee’s behalf) as well as any federal or state withholdings the employee has asked you to withhold on their behalf.  In all, you should estimate 12 – 15% in taxes and unemployment insurance if you aren’t paying the employee’s portion of Social Security and Medicare, and 20 – 23% if you are covering their share of the taxes.  

In addition to paying your employee, you’ll need to file Colorado Unemployment Insurance reports each quarter (if you are paying out more than $1,000 per quarter), make quarterly tax deposits using the EFTPS system, prepare and mail W-2’s to each employee, prepare and mail a W-3 to the Internal Revenue Service, and file an annual Schedule H Household Employment Taxes form.  Schedule H is attached to your tax return, and reconciles your annual amounts of Social Security, Medicare, Federal Withholdings, and Federal Unemployment Taxes. 

Sounds like a lot?  To be honest, I didn’t even realize the extent of the requirements until I started digging for my own personal knowledge.  I don’t recommend attempting it alone, so if you find yourself hiring a nanny, housekeeper or other regular help, I suggest that you contact a CPA or payroll processor for help (that would be me, if you are in the market for one!!!), at least until you get a feel for all the deadlines and paperwork requirements.