As you prepare to file your small business tax return,
you’ll need to be aware of several new tax laws that went into effect in 2009.
Summarized below are the major changes as they pertain to
small business interests, if you need information about new tax law and the 2010
filing season, check out Small
Business Tax Center on Business.gov.
This one-stop shop online portal helps business owners stay abreast of tax
requirements, tax changes and a whole range of tax tips to help you prepare for
the year ahead.
2009 Tax Law Changes that Impact Small
The following list of 2009 federal income tax law changes is
drawn from information provided by the IRS. Many
commercially available tax preparation software tools do take these changes
into account, but do your due diligence first.
This is not a comprehensive list, so be sure to talk to your
tax advisor if you have questions about how your small business is impacted.
Homebuyer Credit – Originally set to expire on November 30, 2009, this
refundable credit was extended last Fall to apply to first-time homebuyer sales
occurring on or after January 1, 2009 and on or before April 30, 2010. If you
operate your small business from an office situated within a first-time home
purchase, you may eligible for an $8,000 credit – which is the equivalent of a
15 year interest-free loan! The IRS has more information about eligibility here.
Business Property and Equipment – What business expense write offs can you
plan on this year? According to the IRS, many small businesses that invest in
new property and equipment will be able to write off most of these purchases on
their 2009 returns. This is because the American Recovery and Reinvestment Act
(ARRA) extended the bonus depreciation and increased the Section 179 deduction.
Normally, businesses recover these capital investments through annual
depreciation deductions spread over several years – so a quick write off of up
to $250,000 on the cost of machinery, equipment, vehicles, furniture, and other
qualifying property place in service in 2009 is now possible. The IRS has more
information on this here.
And Section179.org, a free
resource for small businesses offers advice
on when and how to take the deduction.
of Business Debt – The ARRA also enables certain businesses to elect to delay recognition of income from
the cancellation of business debt in 2009 or 2010. Income recognition can be
deferred until the 5th year after the reacquisition, and then the income is
included ratably over the following five years. If you wish to elect this
option refer to the guidelines from the IRS here.
Credit for COBRA Premium Assistance to Employees – Another ARRA benefit, if your small business provided COBRA assistance
to terminated employees in 2009 the Act provides for a 65% credit against COBRA
amounts paid. The credit is taken against employment taxes on Form 941, Form
944, or Form 943. The credit is treated as a deposit made on the first day of
the return period (quarter or year). More here.
Energy Credits – Expected to expire after 2008, the business energy credit
of $4,000 for purchases of qualifying fuel cells property, micro turbine
property, and solar energy property are now extended through 2016. More.
There are many more tax changes that may
impact or benefit your small business. To help you stay on top of these the IRS
lists all its tax changes on the www.irs.gov
site here: Tax
Changes for Business. For information about changes to state tax law refer
to your state government Web site.
Tax Season 2010 –
Online Help from the IRS
The IRS has launched a portal – Tax Season 2010
– that includes news releases, fact sheets, tax tips, a YouTube video and
podcasts with information about this year’s filing season. The portal offers
advice on choosing a tax preparer, tips to help you maximize your tax credits,
Visit www.IRS.gov or its small business page
for more information on how the agency is working to help business owners during
tax season. You can also refer to Business.gov
for small business resources.
Coming Next – Tax
Changes for 2010
Don’t miss my next post, which will focus on tax changes for
2010 and how these should be rolled into your tax planning for the year ahead.