New fed tax bill: Your department-by-department to-do list

Just what you needed right about now: a massive new to-do list!

That 11^th-hour extension of the Bush tax cuts and then some saddles Finance departments everywhere with a slew of additional tasks.

Fret not. We’ve broken down by department, new (or continuing) responsibilities for Finance courtesy of the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 (H.R. 4853).

Payroll

Perhaps the highest-profile twist lands square in Payroll’s lap:

Payroll tax holiday. Nobody wants employees’ first paychecks of the year to be wrong, particularly Payroll, who will not only have to hear about it, but correct it! Make sure your payroll system is adjusted to account for the 2% reduction in the employee-paid portion of Social Security taxes on all wages earned up to $106,800. (No relief for your company on this one – the employer-paid portion of the payroll taxes remains at 6.2%.)

Credit for employer wages for activated military reservists through the end of 2011. Have heroes currently serving our country on your payroll? Your business gets a tax break for it.

Benefits

The other very large (and popular) change rests on Benefit’s plate:

UI benefits through 2011. That’s as long as a former employee’s UI benefits hadn’t lapsed. And unemployed workers currently collecting 26 weeks of state UI benefits will now be able to move into the federal unemployment compensation program once they’ve exhausted state benefits under the new law.

On-site childcare credit. If your company generously provides childcare to employees (and did so before 2011 began), you can claim a tax credit on qualified expenses up to $150,000 through Dec. 31, 2012.

Accounts Payable

Little changes for A/P in the deal:

Educational expenses. This extension keeps this benefit out of Payroll’s hands and in A/P’s  for two more years. The exclusion from gross income of certain educational expenses runs through 2011.

Tax

The extension of these three tax credits brings welcome news, especially to many manufacturers:

• The New Markets tax credit gets extended through 2011 at a level of $3.5 billion each year
• Research and Development tax credit is reinstated for 2010 and extended through 2011, and
• Increase in the rehabilitation tax credit for property placed in service through the end of 2011 in the Gulf Opportunity (GO) Zone.

The Executive Team

Top decision-makers will need to put their heads together fast to determine just how willing they are to go for growth in the coming year.

Bonus depreciation. You’ll enjoy 100% depreciation deduction for investments in certain new equipment placed in service after Sept. 8, 2010 and through Dec. 31, 2011. And for taxable years after 2012, you can immediately deduct the costs of certain property rather than depreciating it over time. The Act extends the increase in the maximum amount and phase-out threshold under Section 179.