Small Business Tax Changes for 2012 tax filings-
- Lower 179 Deduction - According to Sec. 179 of the IRS code small businesses can deduct only $139,000 for newly acquired machinery, vehicles, equipment and other property. As of 2012, real estate is no longer eligible for Sec. 179 deduction.
- Lower Bonus Depreciation Deduction - the deduction kicks in once a small business maxes out the Sec. 17 deduction. Previously, a business could deduct 100% of certain equipment purchases when Sec. 179 and bonuses were calculated. In 2012, the deduction is decreased to 50% (up to a maximum of $2M).
- Retirement Plans - the amount that an employee can contribute to a 401(k) 403(b) and most 457 plans will increase to $17,000. A small business can contribute up to $50,000 to profit-sharing or SEPs.
- Social Security Wage Base Increase - The base is increased by 3.6% or to $110,100. The same increase aplies to self-employed business owners and will result in an increase to the self-employment tax of approx $400.
- The 1099-K Form - The businesses are required to report the earnings received through the third party payment systems, such a PayPal, on this form. The filing of form 1099-Misc in these cases will not be required.
Tax Updates for 2013
We keep you informed of the most important changes:
Roth IRA and Designated Roth accounts - new rules apply for reporting of converted or rolled over amounts.
Personal Exemption - increased to $3,900.
Standard Deduction - increased to $12,200 for married filing jointly.
Adoption Credit - increased to $12,970.
Estate Tax - credit increased to $5.25 million.
AMT exemption amount - increased to $80,800 for married filing jointly and $51,900 for single taxpayers.
Please see Federal and State Updates section or contact us for more information about changes in tax law.