Tax season is here again, so business owners are scrambling to find ways to keep as much of their money as possible. Although many people feel that the United States is trending toward higher taxes, there are some surprise tax changes that might help keep Uncle Sam’s hands out of businesses’ pockets. Here are just a few of the new tax breaks for business that can make a big difference.
Health care tax credit
Although businesses have been reducing the portion of employee health benefits that they pay, shifting more of the cost to employees, some small businesses may still pay more than half of employee coverage. In these cases, businesses can claim up to 35% of their health insurance costs.
Companies that are exempt from taxes can take 25% of their costs this year and 35% in years that follow.
Self-employed health insurance
Workers that work for themselves and have enough money to buy their own health insurance can now deduct that expense from both their income tax and their self-employment tax (why does the government punish people for working for themselves anyway?), rather than just an income tax deduction.
This tax break for businesses lets the full cost of new equipment up to half a million dollars be deducted from business taxes as long as total capital expenditures for the company is $2 million. Other rules apply too (for example, the company must have a reported profit for the year), which shouldn’t be surprising considering the complexity of the American tax code.
For 2010 taxes, a more depreciation can be claimed based on an accelerated schedule. This bonus can be claimed even for companies that lost money and is designed to let businesses keep more of the money that they have earned.
Businesses that bought a new vehicle get an extra $8,000 of depreciation to claim. There are a lot of extra rules about which vehicles qualify, so be sure to carefully check them all out.
General business credits
Business owners that face the dreadful Alternative Minimum Tax get a break this year because they can take the general business credits that normally are not permitted for their category.
Although most of the new tax breaks for business seem to be either almost impossible to qualify for or not enough to warrant the work it takes to claim them, business owners should look into each one further and consult with their tax advisors to see how they might help.