8 Tax Changes That Can Impact Your 2010 Small Business Taxes
Small businesses are one of the main driving forces behind job creation, consumer spending, new innovations, and overall success of the economy. The government typically tweaks tax laws that impact small businesses in order to help grow the economy or to help promote certain government programs. The tax changes that are made each year can either help or hurt small business owners. Below are 8 recent tax changes that can impact small business owners this year.
1) Small Business Health Care Tax Credit: This credit is offered to encourage employers of low to moderate income works to offer health insurance coverage. The amount of this credit is up to 35% of the small business' premium costs incurred in 2010.
2) Standard Mileage Rates: There are 3 standard mileage rates. Below are the changes for each rate:
- Business use of your car: This rate has dropped from 55 cents a mile to 50 cents a mile.
- Medical or moving purposes: This rate has dropped from 24 cents a mile to 16.5 cents a mile.
- Service of charitable organizations: This rate has been kept constant at 14 cents a mile.
3) Cancellation of Business Debt: In 2009 there were changes made to the laws around canceling business debt. For 2010, a business can delay the reporting of income gained from the cancellation of debt up to 5 years. Typically a business would have to pay taxes in the current year that the business debt was canceled.
4) COBRA Premium Assistance Credit: The American Recovery and Reinvestment Act of 2009 allow businesses to take a credit against certain employment taxes for providing COBRA premium assistance to individuals that are eligible.
5) Deduction for Domestic Production Activities: Starting in 2005 the IRS allowed certain companies to take a deduction for US-based business activities. The deduction started off at 3% in 2005 and for tax years beginning after 2009, the percentage increased to 9%. This deduction only applies to a small percentage of business types, so be sure to check to see if your business qualifies.
6) Tax on Indoor Tanning Services: The IRS has placed a 10% excise tax on indoor UV tanning companies. This tax went into effect on July 1, 2010.
7) Expanded Work Opportunity Credit: The Work Opportunity Tax Credit is a tax credit that gives businesses and incentive to hire individuals within certain target groups that have faced barriers to employment. The IRS has recently extended this credit to two additional target groups, unemployed veterans and disconnected youth.
8) Payroll Tax Exemption for Hiring Unemployed Workers: Under the HIRE Act, business are given a payroll tax exemption of social security tax on wages paid to qualified employees between March 19, 2010 and December 31, 2010.
Keeping up to date on recent changes to tax deductions and tax credits can turn into some sizable tax savings, while helping to improve the economy and helping certain government programs.
