It’s tax season, and that means it’s time to crunch some numbers and dig through last year’s expenses. As you’re well aware, small business owners have an extra bit of work ahead of them. Here are three issues to think about this tax season:
Tax extender legislation
In December 2015, President Obama signed into law a tax extender bill that serves as a one-year extension of many tax-related credits and deductions. “[It] sent business owners scrambling to take advantage of the $500,000 Section 179 deduction and 50 percent bonus depreciation, which had been set to expire,” writes John Hewitt in an Entrepreneur article. “The bonus depreciation allowed businesses to deduct half the cost of new capital purchases in the first year. The $500,000 in Section 179 expensing with a $2.5 million investment ceiling allowed a business to deduct the cost of a small capital purchase immediately, instead of writing it off over time.”
If there isn’t another extension by the close of 2016, that 179 deduction would be reduced to $25,000 and there will be no bonus depreciation.
Many business owners aren’t aware that loss prevention and financial scamming extends beyond daily operations. If a tax filer uses another company’s Employer Identification Number (EIN), the company can lose money without even realizing it.
“The Treasury Inspector General for Tax Administration says that over the next five years, the IRS could issue nearly $11.4 billion fraudulent tax refunds based on falsely-obtained Employer Identification Numbers (EIN),” Hewitt explains. “Unfortunately, business owners are unaware that their identity has been stolen until they receive a letter or notice from the IRS or another federal or state agency.”
The IRS’ website has an extensive set of FAQs and resources for tax preparers and business owners. Safeguard your business by understanding where common vulnerabilities are and work with a tax professional who can help you avoid mistakes that could cost you.
New ACA requirements
As Dan Caplinger writes in an article, there are three changes to the Affordable Care Act that affect taxpayers, and one in particular affects employers. When the ACA was signed into law, businesses with 50 or more employees working 30 hours a week had until the start of 2014 to cover their employees. Those guidelines evolved over time and in 2016 they include businesses with 50-99 employees.
Hewitt also explains: “The Congressional Budget Office has estimated that it would cost about $5,800 a year in 2016 to provide an individual the health-care coverage required. That’s an additional $3 per hour in ‘minimum health wage,’ says the National Center for Policy Analysis.”
As a small business owner, you already have a lot on your plate. Take a few extra steps this tax season to make sure you’re prepared for any changes that could cost you time and money down the line.