The Small Business and Work Opportunity Tax Act of 2007, signed into law on May 25, offers tax breaks for you and your business — and also contains less beneficial provisions that may require changes to your tax plan.
Here’s an overview:
• Additional Section 179 deduction. For 2007, you can expense up to $125,000 of business assets, including furniture, equipment, and computer software. Under prior law, the maximum Section 179 expense for this year was $112,000. In addition, the special rule for the Gulf Opportunity Zone is now effective through 2008. This rule applies to specific areas affected by Hurricane Katrina and allows an extra Section 179 deduction of as much as $100,000.
• Extended Work Opportunity Tax Credit. The credit, scheduled to expire after 2007, has been extended through August 31, 2011, and the definition of several “targeted groups” was expanded. The credit offsets part of your income tax when you employ workers such as veterans or vocational rehabilitation referrals.
• Simplified family business filing requirements. If you wanted your spouse to take an active role in your business but hesitated because you thought you’d have to file a partnership return, now may be the time to act. Starting this year, you can elect to allocate business income on your joint Form 1040 tax return.
Tip: Splitting business income can affect future social security benefits.
• Expanded kiddie tax. For 2007, when your under age 18 dependent child receives net unearned income of more than $1,700, the excess is taxed at your rate. Beginning in 2008, the tax will apply to children under age 19 and to students under age 24.
Other provisions affect the FICA tip credit, alternative minimum tax limits on certain credits, and S corporation rules.
David Compton is a
Certified Public Accountant with offices in Meridian and Birmingham, Ala.
Business
Small business gets tax breaks in new law
- Business
-
- Business Beat
-
Who has to file a 2011 income tax return
Taxes are a frequent topic of conversation at this time of year, and a common question is, who has to file a tax return? The rules for filing 2011 tax returns are straightforward for most people.
-
Are people really retiring later?
True or false? You may have heard this claim before (or something like it): “Many Americans are being forced to retire later because their savings and investments took a hit in the Great Recession.”
-
What’s your emergency fund range?
Dear Dave,
In your plan, you talk about Baby Step 3 as saving enough to have three to six months of expenses in your emergency fund. My husband and I were wondering how you can determine whether you need to be on the low end or high end of that range?
Amanda -
Remember ‘nanny tax’
Though it hasn’t made headlines recently, the nanny tax is still around – and it still applies to other household workers in addition to nannies. Here’s what you need to know.
-
Highlight these tax dates on your 2012 calendar
Get out your red pen and circle these dates on your 2012 calendar if any of the following upcoming tax deadlines apply to you or your business.
-
RMD precautions and options
After you turn 70, the IRS requires you to withdraw some of the money in your retirement savings accounts each year. These withdrawals are officially called Required Minimum Distributions (RMDs).
-
Getting off on the right foot in 2012
Every year brings some financial change, so here are some relevant changes relating to investment, tax and estate planning for 2012.
-
Hold your investments where taxes will be lowest
How much does it matter whether you hold your stock and bond investments in a taxable account or a retirement account?
-
Congress extends payroll tax cut for employees
In the end, the Democrats and Republicans in Congress agreed to disagree. Before adjourning for the year, the feuding factions were finally able to set aside their differences to temporarily extend the “payroll tax holiday” for two months.
- More Business Headlines





