As 2010 quickly winds down, there are quite a few tax changes that are taking effect that may influence your business decisions. From Section 179 to the HIRE Act, the federal government has instituted several initiatives that many small and mid-size businesses can take advantage of before the year ends. Our goal at Stone Carlie is to keep you informed about these changes so you can make a well-informed decision that is in the best interest of your business. Below are a few highlights for your year-end tax planning benefit.
Changes in Depreciation and Expensing
Section 179 is an IRS incentive to encourage businesses to purchase equipment and invest in themselves while spurring the economy, one transaction at a time. Section 179 allows a business to deduct the full purchase price of qualifying equipment purchased or financed during the tax year instead of taking a deduction over several years through depreciation. The Section 179 deduction has increased to 0,000 but is reduced for every dollar that exceeds million until it is reduced to at .5 million (emphasizing its effectiveness for small and medium-sized businesses).
HIRE Act
The Hiring Incentives to Restore Employment (HIRE) Act offers two tax benefits to businesses that hire “qualified employees” (previously unemployed workers). The first is a payroll tax exemption that allows forgiveness for social security tax paid on qualified new hires. The second is a tax credit for keeping qualified new hire(s) on payroll for 52 weeks.
Small Business Tax Credit
As we mentioned in our previous blog, the small business tax credit for health insurance premiums applies to businesses with 25 or fewer employees and average annual wages of less than ,000. Full credit is available to businesses with 10 or fewer employees and average wages of less than ,000. The credit is for up to 35% of the cost of group health coverage, including premiums paid before the act’s effective date.
Various Business Tax Breaks
100% gain exclusion for qualified small business stock purchased by December 31st, 2010 and held for five years
Temporary reduction in S Corporation built-in gain period
Health insurance costs deductible in computing Self-Employment tax
Cell phones no longer listed property
These significant changes can certainly impact how you conduct your business decisions from this point forward. Be sure to check out our current monthly newsletter for more information, and we encourage you to contact us with any questions you may have about these changes.
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