Will TV production companies stop filming in New Jersey?  Odds are they will, if the state axes the tax credit for production companies. At a state hearing Wednesday, actors, producers and directors made their case to extend the tax credit.

Representatives from “Mercy” and “Law and Order: Special Victims Unit” urged Republican Gov. Chris Christie to reconsider ending the 20 percent tax credit the state has offered since 2006 to lure movie and TV production companies to the state. Both TV series are filmed largely in New Jersey.

New Jersey has benefitted greatly by the popular and successful TV drama “The Sopranos”. Feature films such as “The Wrestler” starring Mickey Rourke as a professional wrestler past his prime and “Julie and Julia” starring Meryl Streep as cooking legend Julia Childs were also filmed in New Jersey.

“If there hadn’t been a credit program in place, New Jersey would not have been an option” as a location for “Mercy,” series producer Jim Bigwood told the hearing chaired by state Senate Budget Appropriations Committee Chairman Paul Sarlo, a Democrat and supporter of the tax credit.

Yesterday’s hearing was held in the warehouse where hospital drama “Mercy” has been filmed since last year. The series was not renewed by NBC but had been considered for cable, a possibility that was nixed because of uncertainty over New Jersey’s tax credit, according to Brian O’Leary, tax counsel for NBC Universal.

O’Leary contrasted the fate of “Mercy” with that of “Law and Order: Criminal Intent,” a New York-filmed series that NBC dropped but opted to move to USA Network.

Critics have characterized New Jersey’s film tax credit as an unnecessary handout to Hollywood. Christie has vowed to cut it from the state budget that must be passed by July 1.

New Jersey will do anything to close it’s budget gap, but cutting the New Jersey tax credit to production companies will continue the flow of businesses leaving the state. According to a study released by Boston College’s Center on Wealth and Philanthropy, from 2004 through 2008, $70 billion in wealth left New Jersey.

Will the TV stars rally for a tax credit extension really make a difference? I don’t think so. It appears the state hasn’t learned that offering tax credits and tax incentives attract, and keep, businesses.

No wonder New Jersey has a budget deficit.

source: The Jersey Journal

The 2010 tax season is over, but if your smart, you’re always thinking about next year’s taxes. This year has been bad for most businesses and experts predict this trend will continue. You can’t do much about the economy but you can take control of your taxes. So, here are some tax tips to consider for the 2010 tax year.

Estimated tax payments
As far as tax planning goes, knowing where you’ve been can help you get to where you want to go. This is especially true if you’re self-employed. In other words, seeing how you came out on your last tax return can alert you to changes you need to make to minimize your tax burden next time. For example, if you underpaid your estimated taxes and were assessed a penalty, or if you overpaid your taxes and got a huge refund, you should adjust your estimated tax payments for this year accordingly. Get on the ball now. The second installment of your estimated payments is due this month–June 15. To figure out how much you should be paying, talk to your tax professional.

Tax credits
Tax credits reduce your tax liability. Here are some to take advantage of.

Health-care reform
Small businesses and tax-exempt organizations can get tax relief offered in the new Small Business Health Care Tax Credit. Small businesses that have fewer than 25 full-time-equivalent employees with average wages of less than $50,000, and that pay at least half of individual health-care coverage costs, will be eligible for credits of up to 35 percent of their share of health-care premiums. This credit is retroactive to the beginning of 2010 and is in effect through 2013. Businesses with 10 full-time-equivalent employees making an annual average of less than $25,000 will receive the maximum credit. Those with more staff members with higher salaries will receive progressively less. Exactly how this credit will play out is yet to be seen; look for the “how-to” in claiming this credit.

Green Businesses
Businesses that make changes in their energy systems can get sizable federal tax credits. Installing a solar water heater, for example, could qualify a business for a tax credit of 30 percent of the cost. But a more significant incentive is the Energy Efficient Commercial Buildings Deduction. Although it is a deduction and not a dollar-for-dollar credit, there is still potential for saving big bucks. By modifying things such as lighting, HVAC systems and other parts of a building to improve energy efficiency, companies could qualify for a deduction of up to $1.80 per square foot of commercial building space. So the owner of a 100,000-square-foot building could receive a one-time, $180,000 federal tax deduction.

Work Opportunity Tax Credit
With so many unemployed people out there, if your business is in a position to hire, do it. You can get the Work Opportunity Tax Credit for hiring people who typically have a hard time finding and keeping gainful work, such as low-income ex-felons, disadvantaged youths and veterans, or those who receive food stamps or supplemental Social Security income benefits. The credit equals 40 percent of the first $6,000 of an employee’s wages for the first year of employment, as long as he or she has worked at least 180 days or at least 400 hours. The rate is 25 percent for fewer than 400 hours, but there’s no credit for an employee who works fewer than 120 hours. To qualify for the credit, you have to file a special form with the state workforce agency, which will certify that the worker is eligible for the credit.

Tax season is really never over and it makes business sense to think about tax planning throughout the year.

Starting in 2010, small businesses and tax-exempt organizations can get tax relief offered by the new Small Business Health Care Tax Credit. This tax credit, signed into law by President Obama earlier this year, takes effect beginning in the tax year 2010. It is designed to help small businesses and small tax-exempt organizations afford the cost of covering their employees.

“We want to make sure small employers across the nation realize that — effective this tax year — they may be eligible for a valuable new tax credit. Our postcard mailing — which is targeted at small employers — is intended to get the attention of small employers and encourage them to find out more,” IRS Commissioner Doug Shulman said. “We urge every small employer to take advantage of this credit if they qualify.”

The tax credit is available to small businesses that pay at least half the cost of single coverage for their employees in 2010. It was created specifically to offer tax help to small businesses and tax-exempt organizations that primarily employ low and moderate-income workers.

Below are specifics and answers to tax questions you may have about the tax credit:

Eligibility Rules
To qualify for this tax relief, small businesses and tax-exempt organizations must meet certain eligibility rules pertaining to the percentage of health care costs they provide, the firm size and average annual wage of it’s employees. The specific eligibility rules are as follows:

• Health care coverage
  A qualifying employer must cover at least 50 percent of the cost of health care coverage for some of its workers based on the single rate.
• Firm size
  A qualifying employer must have less than the equivalent of 25 full-time workers (small businesses with fewer than 50 half-time workers may be eligible).
• Average annual wage
  A qualifying employer must pay average annual wages below $50,000.
• Both taxable (for profit) and tax-exempt firms qualify

Amount of Credit
The maximum tax credit is 35% of premiums paid for small businesses and 25% for tax-exempt organizations. Since the credit is targeted to help those who employ low- and moderate-income workers, the maximum credit goes to smaller employers — those with 10 or fewer full-time equivalent (FTE) employees — paying annual average wages of $25,000 or less. Below are more details on the Amount of Credit:

• Maximum Amount
  The credit is worth up to 35 percent of a small business’ premium costs in 2010. On Jan. 1, 2014, this rate increases to 50 percent (35 percent for tax-exempt employers).
• Phase-out
  The credit phases out gradually for firms with average wages between $25,000 and $50,000 and for firms with the equivalent of between 10 and 25 full-time workers.

Small business or tax-exempt organizations can determine if they qualify for the Small Business Health Care Tax Credit with three simple steps.

To recap, starting in the tax year 2010, the new health care tax credit will offer small businesses tax help as an incentive to provide their employees health care coverage.

To get more information about the tax credit or get answers to your tax questions go the IRS website.

source: irs.gov

Individuals can take advantage of new energy tax credits provided by The American Recovery and Reinvestment Act to help pay for home improvements, alternative energy equipment and the purchase of plug-in electric vehicles.

The Residential Energy Property Credit increases the energy tax credit for homeowners who make energy efficient improvements to their existing homes. This energy tax credit raises the credit rate to 30 percent of the cost of all qualifying improvements.  The new law also raises the maximum credit limit to $1,500 for improvements completed in 2009 and 2010.

Homeowners can apply this credit to improvements such as adding insulation, energy efficient exterior windows and energy-efficient heating and air conditioning systems.

The Residential Energy Efficient Property Credit is a nonrefundable energy tax credit that can be used to help offset the cost for qualified alternative energy equipment for the home.  Equipment such as solar hot water heaters, geothermal heat pumps and wind turbines qualify for this energy tax credit. The new law allows for a credit equal to 30 percent of the cost of qualified property.

Taxpayers can get a Plug-In Electric Vehicle Credit for purchases of two types of plug-in vehicles:  certain low-speed electric vehicles and two- or three-wheeled vehicles. The amount of the credit is 10 percent of the cost of the vehicle, up to a maximum credit of $2,500 for purchases made after Feb. 17, 2009, and before Jan. 1, 2012. To qualify, a vehicle must be either a low speed vehicle propelled by an electric motor that draws electricity from a battery with a capacity of 4 kilowatt hours or more or be a two- or three-wheeled vehicle propelled by an electric motor that draws electricity from a battery with the capacity of 2.5 kilowatt hours.

Taxpayers can get a Conversion Kit tax credit for purchases of plug-in electric drive conversion kits.  The credit is equal to 10 percent of the cost of converting a vehicle to a qualified plug-in electric drive motor vehicle and placed in service after Feb. 17, 2009. The maximum amount of the credit is $4,000. The credit does not apply to conversions made after Dec. 31, 2011. A taxpayer may claim this credit even if the taxpayer claimed a hybrid vehicle credit for the same vehicle in an earlier year.

Starting in 2009, the Alternative Motor Vehicle Credit, including the tax credit for purchasing hybrid vehicles, can to be applied against the Alternative Minimum Tax. Prior to the new law, the Alternative Motor Vehicle Credit could not be used to offset the AMT.

These energy tax credits are more valuable than tax deductions of the same amount, because deductions are applied before the tax rate, while credits are applied after. For instance, with a 35% tax rate, a deduction of $100 would save only $35 of taxes, while a $100 credit would save $100 worth of taxes.

source: irs.gov