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Before you File your 2009 Tax Return; Take Note of Major Tax Changes that Apply this Year!

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Before you File your 2009 Tax Return; Take Note of Major Tax Changes that Apply this Year!

By Caron_Beesley, Contributor
Published: January 21, 2010

Note: The ARRA (Recovery Act) initiatives and/or programs referenced in this article will expire on September 30, 2010. Any statements about qualifying time periods, or extensions of these dates, as they pertain to the availability of ARRA programs are over-ridden by the expiration of the Act on September 30, 2010.

As you prepare to file your small business tax return, you'll need to be aware of several new tax laws that went into effect in 2009.

Summarized below are the major changes as they pertain to small business interests, if you need information about new tax law and the 2010 filing season, check out Small Business Tax Center on Business.gov. This one-stop shop online portal helps business owners stay abreast of tax requirements, tax changes and a whole range of tax tips to help you prepare for the year ahead.

2009 Tax Law Changes that Impact Small Business

The following list of 2009 federal income tax law changes is drawn from information provided by the IRS. Many commercially available tax preparation software tools do take these changes into account, but do your due diligence first.

This is not a comprehensive list, so be sure to talk to your tax advisor if you have questions about how your small business is impacted.

  • First-Time Homebuyer Credit - Originally set to expire on November 30, 2009, this refundable credit was extended last Fall to apply to first-time homebuyer sales occurring on or after January 1, 2009 and on or before April 30, 2010. If you operate your small business from an office situated within a first-time home purchase, you may eligible for an $8,000 credit - which is the equivalent of a 15 year interest-free loan! The IRS has more information about eligibility here.

  • Expensing Business Property and Equipment - What business expense write offs can you plan on this year? According to the IRS, many small businesses that invest in new property and equipment will be able to write off most of these purchases on their 2009 returns. This is because the American Recovery and Reinvestment Act (ARRA) extended the bonus depreciation and increased the Section 179 deduction. Normally, businesses recover these capital investments through annual depreciation deductions spread over several years - so a quick write off of up to $250,000 on the cost of machinery, equipment, vehicles, furniture, and other qualifying property place in service in 2009 is now possible. The IRS has more information on this here. And *Section179.org, a free resource for small businesses offers *advice on when and how to take the deduction.
  • Cancellation of Business Debt - The ARRA also enables certain businesses to elect to delay recognition of income from the cancellation of business debt in 2009 or 2010. Income recognition can be deferred until the 5th year after the reacquisition, and then the income is included ratably over the following five years. If you wish to elect this option refer to the guidelines from the IRS here.
  • Business Credit for COBRA Premium Assistance to Employees - Another ARRA benefit, if your small business provided COBRA assistance to terminated employees in 2009 the Act provides for a 65% credit against COBRA amounts paid. The credit is taken against employment taxes on Form 941, Form 944, or Form 943. The credit is treated as a deposit made on the first day of the return period (quarter or year). More here.
  • Business Energy Credits - Expected to expire after 2008, the business energy credit of $4,000 for purchases of qualifying fuel cells property, micro turbine property, and solar energy property are now extended through 2016. More.

There are many more tax changes that may impact or benefit your small business. To help you stay on top of these the IRS lists all its tax changes on the www.irs.gov site here: Tax Changes for Business. For information about changes to state tax law refer to your state government Web site.

Tax Season 2010 - Online Help from the IRS

The IRS has launched a portal - Tax Season 2010 - that includes news releases, fact sheets, tax tips, a YouTube video and podcasts with information about this year's filing season. The portal offers advice on choosing a tax preparer, tips to help you maximize your tax credits, and more.

Visit www.IRS.gov or its small business page for more information on how the agency is working to help business owners during tax season. You can also refer to Business.gov for small business resources.

Coming Next - Tax Changes for 2010

Don't miss my next post, which will focus on tax changes for 2010 and how these should be rolled into your tax planning for the year ahead.

Additional Resources

*Note: Hyperlink directs reader to non-government Web site.

About the Author:

Caron Beesley


Caron Beesley is a small business owner, a writer, and marketing communications consultant. Caron works with the SBA.gov team to promote essential government resources that help entrepreneurs and small business owners start-up, grow and succeed. Follow Caron on Twitter: @caronbeesley


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