The Small Business Jobs Act of 2010 was signed into law by President Obama on September 27, 2010 (“Jobs Act”). The Act contains a number of provisions for small business owners, and is intended to stimulate the economy. Most provisions will not be long-lived, however, so now is the time to act in order to recognize the intended tax-savings. Click here for a brief summary of some of the more important provisions, and those with the broadest application.
The following contains a brief summary of some of the more important provisions, and those with the broadest application.
- The expensing deduction for business assets has increased to $500,000 for 2010 and 2011. This deduction allows a dollar-for-dollar decrease in taxable income for assets purchased for business use. It is a deduction that is available immediately in the year of purchase. Certain phase-outs do apply for the deduction once your purchase amount reaches $2,000,000.
- Certain costs associated with real property interests qualify for the first time for the expensing deduction in 2010 and 2011. Qualifying real property interests include leasehold improvements, qualified restaurant property and retail improvement property.
- Fifty-percent bonus depreciation and exemption from the Alternative Minimum Tax adjustment are extended through 2010 for “qualified property” (including most machinery, equipment or other tangible personal property).
- The deduction for start-up expenses for a trade or business is increased to $10,000 from $5,000. The deduction is also subject to phase-out for expenses exceeding $60,000. Available for expenses incurred after December 31, 2009 and before January 1, 2011. Expenses exceeding the $10,000 amount continue to be deductible ratably over 180 months beginning with the month in which the business is commenced.
- For calculation of self-employment tax, a deduction is now available for the cost of health insurance for an individual, spouse, dependents, and children who have not attained the age of 27.
- The cost of a cell phone may now be deducted or depreciated like other business property costs for tax years ending after December 31, 2009. Cell phones have been removed from the category of “listed property.”
- Individuals or businesses who make payments of $600 or more to a service provider (such as a plumber, painter, or accountant) related to rental income will be required as of January 1, 2011 to issue the provider of service and file with the IRS a Form 1099-MISC reporting the payment.
A friend of OccMed Colorado, Jane Paddison is a tax attorney practicing in Boulder. If you have any questions or would like more information, please contact her at firstname.lastname@example.org or 303.938.4096. You can also reach her at: Jane Caddell Paddison, P.C., 1215 Mapleton Avenue, Boulder, CO 80306.