As self-employed business people are well aware, the time to file their small business tax returns is practically around the corner. Many self-employed people have already started thinking about tax returns (or at least it’s in the back of their minds). I wanted to bring your attention to some key tax changes that could impact how you file your return this year, if self-employed. Thanks to the Wyoming Business Report, who I credit for these stats below:
Here are some of the changes self-employed professionals should be aware of when filing their 2010 return:
- Standard mileage rates adjusted — Business owners using their vehicle for company business can deduct 50 cents per mile driven on their 2010 tax return. The rate also has been set for 2011 at 51 cents per mile. The rate for medical miles driven was 16.5 cents per mile for 2010 and 19 cents per mile for 2011, while charitable miles use the rate of 14 cents per mile for both years.
- AMT exemption increased — For tax year 2010, the Alternative Minimum Tax exemption for a married couple filing a joint return is $72,450, and $47,450 for single filers. The AMT also has been determined for 2011: $74,450 for a joint return and $48,450 for single return.
- Self-employed health insurance deduction — As always, the premiums paid for health insurance by the small business owner will be deducted on page one of form 1040. But for 2010, those same premiums can be a deduction, reducing net earnings from self-employment and the related self-employment tax. This can be up to a 15.3 percent savings on the cost of health insurance.
- Contribution limits for individual retirement plans — When an IRA contributor who is not covered by a workplace retirement plan is married to someone who is covered, the deduction is phased out if the couple’s income is between $167,000 and $177,000.
- Increase in start-up expense deduction — For 2010, the current deductible amount of new business start-up expenses was increased to $10,000 from $5,000. Any additional amounts must be expensed over not less than 180 months.
- Net operating loss carryback period extended — If 2010 was a year of losses, this change can provide needed cash flow relief. The number of prior years’ taxes that can potentially be recovered by carrying back a current year loss was increased to as much as 5 years.
- Maximum Section 179 deduction increased — Small businesses received an additional incentive to invest in new equipment with the increase of the maximum allowable deduction under Code Section 179 from $250,000 to $500,000. At the same time, the limit for the phase-out of the deduction was increased to $2 million from $800,000.
**stats from the Wyoming Business Report**
Read on about these and further tax law changes for small businesses to ensure you are taking advantage of these tax cuts for your return this year!
It’s important for any professionals, self-employed or working for a company to file a correct tax return. The IRS are auditing more and more individuals and businesses this year. Avoid any red flags for your business, do your research and arm yourself with the knowledge you need to stay out of IRS trouble and flourish your business.
But the surest way to successfully obtain business tax relief is to seek professional help from a tax attorney, CPA, or Certified Tax Resolution Specialist who is best positioned to represent you and your business against the IRS. For more information, check out our tax help services.
More Tax Help, IRS News and Tax Relief Tips:
- IRS Tax Help News: IRS Employee Caught Owing $14,912 in Back Taxes & Penalties
- Tax Help News: IRS Wants To Give You Your Money Back
- Tax Resolution Services Offers End-Year Tax Tips on San Francisco Examiner
- Tune In For Tax Help Tips on Big Biz Show Every Thursday From Now Until April 15th!
- IRS Help and Income Tax Relief for Individuals and Businesses Unable to Meet Tax Obligations