New tax rules for your small business
Created on Thursday, 21 March 2013 14:29 Last Updated on Thursday, 21 March 2013 14:29 Published on Friday, 22 March 2013 06:00 Written by Courier Newsroom Hits: 569
The American Taxpayer Relief Act of 2012 resolved most of the tax issues that were a part of last year’s “fiscal cliff” debates and answered many pending tax questions for small businesses. The act will have an effect on businesses and long-term planning implications, so the Pennsylvania Institute of Certified Public Accountants offers this update to answer some of the most common questions.
Are There Changes in Payroll Taxes?
Immediately after Jan. 1, 2013, the new law did not extend the temporary 2 percent reduction in the employees’ portion of the Social Security payroll tax. That increase, which is not related to the new law, returns the tax to 6.2 percent on income up to $113,700 in 2013. In addition, there is a 0.9 percent Medicare surtax on certain taxpayers who earn in excess of $250,000.
What about Section 179 Expensing?
The law does extend a number of valuable small business provisions, including small-business expensing under Internal Revenue Code Section 179, through 2013 and retroactive to the beginning of 2012. The deductions can be used for purchases of a wide range of new and used capital equipment, including software, from both last year and this year. The dollar limit that can be expensed in 2012 and 2013 is $500,000, with a $2 million investment limit. There is some uncertainty in this area going forward, since the expensing and investment limits are set to drop significantly in 2014. Your CPA can offer advice on the best steps for your business.
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