Definitions for: job creation and worker assistance act of 2002
job creation and worker assistance act of 2002
legislation passed by Congress and signed into law on March 9, 2002 to stimulate the economy out of the recession and economic contraction caused by the terrorist attacks of September 11, 2001. Here are some of the main provisions of the law:
Provisions Affecting Individuals
- Extended unemployment benefits for 13 weeks for workers who filed an initial claim for unemployment benefits on or after March 15, 2001.
- Extends the use of personal credits such as the child tax and adoption credits through December 31, 2003 for use in calculating the alternative minimum tax.
- Creates above-the-line deduction for classroom expenses for elementary and secondary school teachers up to $250 annually for supplies, books and computer equipment.
- Archer Medical Savings Accounts extends through December 31, 2003.
- Allows taxpayers to claim the education IRA exclusion and HOPE scholarship credit in the same year.
Provisions Affecting Business- Business taxpayers become entitled to take an additional first-year depreciation deduction equal to 30% of the adjusted basis of qualified property. This 30% bonus depreciation is allowable for regular and AMT purposes for the tax year in which the property is placed into service after September 10, 2001. Property eligible for this treatment includes property with a recovery period of 20 years or less; water utility property; and certain kinds of computer software and qualified leasehold improvements.
- Net operating losses (NOLs) can now be carried forward for five years instead of two years if the losses arise in tax years 2001 or 2002.
- Taxpayers using the accrual method of accounting can now exclude from income money earned from the performance of qualified services that they think will not be collected. Qualified services include health, law and consulting services, and other services, provided to small businesses.
- Allows Subchapter S corporations to discharge certain indebtedness for tax purposes when they become insolvent.
- Extended many expiring business tax credits until December 31, 2003 including: Work Opportunity Tax Credit; Welfare-to-Work Credit; credit for producing electricity from wind, biomass, and poultry litter; clean-fuel vehicle deduction; qualified zone academy bonds; tax incentives for investment in Native American reservations; and other energy incentives.
Creation of New York City Liberty Zone
Created special tax breaks for taxpayers in the Liberty Zone of southern Manhattan to encourage them to rebuild after the events of September 11:
- The maximum deduction amount for qualifying property used in the Liberty Zone is increased to the cost of the property or $35,000, whichever is less.
- An additional first-year 30% depreciation deduction is created for qualifying property, on top of normal first-year depreciation deductions.
- The Work Opportunity Tax Credit is added for Liberty Zone taxpayers who work in a business in the Zone or for a business that relocated from the Zone to another location in New York City due to the terrorist attacks.
- A five-year replacement period (instead of the usual two-year period) is created for involuntarily converted property due to the terrorist attacks, if the property is replaced with other property used in New York City.
- Qualified leasehold improvement depreciation is allowed for fiveyear property put into service from September 10, 2001 through January 1, 2007.
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