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HR 5297 Small Business Jobs Act of 2010 Outline of Tax Stuff

September 30, 2010 2:09 pm / Leave a comment

U.S. Capital

Image by Biggunben via Flickr

By Stacie Clifford Kitts, CPA

Well loyal readers, I am finally getting around to outlining the tax aspects of the Small Business Jobs Act.   Because I am a visual interactive learner, writing and organizing helps me to retain information. I guess you could say that blogging is like a study technique for me.  Too bad it doesn’t qualify for continuing education credit.  *sigh* oh well.

Fixed asset expensing – Section 179

  • Maximum expense amount $500,000
  • Phase out amount $2 million for years 2010 and 2011

Fixed asset bonus depreciation – Section 168(k)

  • Extended through 2010
  • Percentage of completion method can be taken into account for qualified property

Qualified small business stock – Section 1202

  • Increases the gain exclusion from the sale or exchange of qualified small business stock to 100%
  • Applies to eligible stock acquired after the enactment date and before Jan 1, 2011

Business credits – Section 38

  • Is extended to five years
  • Can be used to offset regular and alternative minimum tax
  • Tax years beginning after 2009

Built in gains – Section 1374

  • Recognition period for computing built in gains tax is the five year period beginning with the first day of the fist tax year for which the corporation was an S Corporation.

Health insurance for self employed individuals

  • (This is a particularly good one) For tax years ending after 2009, self employed individuals can deduct health insurance for themselves, their spouses, dependents and children under 27 against net earnings for self-employment for purposes of calculating their SECA taxes ( SECA is equivalent to a workers FICA tax)

Startup expenses – Section 195

  • Expenses increased to $10,000 for years beginning in 2010 and 2011
  • Limitation on deduction is increased to $60,000
  • Calculated by the lessor of 1) the amount of the startup expense or 2) 10,000, reduced (but not below zero) by the amount by which the startup expenditures exceed $60,000

Reportable and listed transactions – penalty under section 6707A

  • The penalty for failure to disclose a reportable transaction is limited to 75% of the decrease in tax resulting from the transactions.
  • Max penalty for a natural person is $10,000
  • Penalty for a non-natural person is $50,000 (so like a business or trust or such)
  • Listed transactions maximum penalty will be $100,000 for a natural person
  • Listed transactions maximum penalty will be $200,000 for non-natural person\
  • Minimum penalty
    • $5000 Natural person
    • $10,000 Non-natural person

Listed property – Section 280A

  • no longer includes cell phone.
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IRS Presents: Five Facts about the Making Work Pay Tax Credit

July 19, 2010 9:07 am / Leave a comment

1. This credit – still available for 2010 – equals 6.2 percent of a taxpayer’s earned income. The maximum credit for a married couple filing a joint return is $800 and $400 for other taxpayers.

2. Eligible self-employed taxpayers can benefit from the credit by evaluating their expected income tax liability and, if they are eligible, by making the appropriate adjustments to the amounts of their estimated tax payments.

3. Taxpayers who fall into any of the following groups during 2010 should review their tax withholding to ensure enough tax is being withheld. Those who should pay particular attention to their withholding include:

  • Married couples with two incomes
  • Individuals with multiple jobs
  • Dependents
  • Pensioners
  • Workers without valid Social Security numbers

Having too little tax withheld could result in potentially smaller refunds or – in limited instances –small balance due rather than an expected refund.

4. The Making Work Pay tax credit is reduced or unavailable for higher-income taxpayers. The reduction in the credit begins at $75,000 of income for single taxpayers and $150,000 for couples filing a joint return.

5. A quick withholding check using the IRS Withholding Calculator on IRS.gov may be helpful for anyone who believes their current withholding may not be right. Taxpayers can also check their withholding by using the worksheets in IRS Publication 919, How Do I Adjust My Tax Withholding?. Adjustments can be made by filing a revised Form W-4, Employee’s Withholding Allowance Certificate. Pensioners can adjust their withholding by filing Form W-4P, Withholding Certificate for Pension or Annuity Payments.

For more information about this and other key tax provisions of the Recovery Act, visit IRS.gov/recovery.
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