Additional small businesses deduction for health insurance
The Federal tax changes made in September that will impact you in 2010 include an ability to deduct your health insurance premiums for the purposes of calculating self-employment tax. Previously the deduction for business owners and covered family members was only applied to reduce the amount used to calculate income tax. (The deduction only applies to profit the business earned.) Now in 2010, it will reduce self-employment tax.
More deduction for starting anew
One obstacle to starting a new business is the initial investment to get it going. To offset the start-up pain, there was a deduction of up to $5,000 for initial costs. (This tax benefit begins to phase out when initial costs go beyond $50,000.) The new Small Business Jobs Act moves the deductible amount up to $10,000 of start up expenses with the phase out starting at $60,000. It’s effective this year, so if you’ve already started a business, you get an unexpected break from Uncle Sam.
While much of the Small Business Jobs Act is focused on tax breaks, there is a section on improving tax collections. This doesn’t take effect until 2012 but it’s worth noting that the requirement to file form 1099 for purchases of goods (not just services) greater than $600 has expanded. This increased reporting will now be required if you have a property that is primarily rented, even if that’s not your main source of income. There are exceptions for individuals who rent their primary residence, including active members of the military.
How all of this applies to you specifically is something that requires a more detailed review. We’re happy to provide that if you set up an appointment either with a phone call or email us at email@example.com.