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New Tax Tips for Businesses

By CAROL TICE, ENTREPRENEUR.COM
Posted: 2009-02-24 18:09:07
Filed Under: Small Business, Small Business Taxes
Entrepreneur.com

Take advantage of every new tax break on your '08 return.

Taxes

In these lean times, there's one move that's always smart--preserve your cash by making sure your business gets every tax deduction possible. It's not always easy to keep track of all the deductions you might qualify for because our tax code keeps changing.

Recently, the IRS released a list of 11 important changes that affect business tax returns for 2008. A few key changes:

Business purchase write-offs: In an effort to stimulate business growth, the Section 179 depreciation allowance for business equipment or property has been expanded for the 2008 tax year only. Business owners can write off up to $250,000 in qualified purchases, double the amount in 2007. In addition, your purchases can total up to $800,000 in all (up from $500,000) without reducing your first-year depreciation write-off.

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    If using the Section 179 deduction doesn't cover all you spent, you can use a greatly expanded, first-year special depreciation deduction for up to 50 percent of the remainder, up to the $800,000 limit. For 2008, this special deduction also includes vehicle purchase costs.

    In 2008, if you bought a vehicle for business use, you can depreciate up to $10,960 for cars or $11,160 for heavier trucks or vans through this deduction. Anything less than 100 percent business use of the vehicle reduces the deduction.

    S corporation income: There's good news for S corps that have income such as investment returns or rent payments. For tax years beginning after May 25, 2007, such income will no longer be classified as passive income, but is considered regular income.

    This is a win-win situation in this economy: Not only does the company get a lower tax rate, but any losses realized in selling the real estate or stocks in 2008 should be deductible. By contrast, losses from the sale of assets categorized as passive income may not be deductible.

    Standard mileage rate: The reimbursement rate for business-related driving comes in two parts this year. Where it was 48.5 cents per mile throughout 2007, spiking gas prices last year prompted the IRS to amend the rate for 2008 to 50.5 cents for the first half of the year, and 58.5 cents for the second half.

    Deferred compensation plans: Income deferred under a nonqualified deferred compensation plan is usually taxed the year the deferral is made. But the IRS changed the complex rules on this issue for 2008, so if you deferred income, be sure to check the fine print to see if you owe the tax now or can wait to pay it.

    Work opportunity tax credit: This program to reward businesses that hire particular categories of disadvantaged workers has been extended to cover hires into 2011. The list of qualified workers has been expanded as well, to include workers in distressed rural areas, older residents of high-crime communities and more veterans.

    Self-employment tax: If you pay self-employment tax, note that the amount of income subject to Social Security tax rose from $97,500 in 2007 to $102,000 in 2008.

    2009-02-24 17:10:53
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    pipetsa 03:57:32 PM Jun 18 2009

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    THIS IS JUNE 2009 A LITTLE LATE FOR 2008 TAX ADVISE.

    tgjh777 06:18:34 AM Apr 13 2009

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    Isaiah 52:8 Thy watchmen shall lift up the voice; with the voice together shall they sing: for they shall see eye to eye, when the Lord shall bring again Zion.Isaiah 52:10 The Lord hath made bare his holy arm in the eyes of all the nations; and all the ends of the earth shall see the salvation of our God.Isaiah 52:12 For ye shall not go out with haste, nor go by flight; for the Lord will go before you; and the God of Isreal will be your reerward.

    tgjh777 06:06:26 AM Apr 13 2009

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    Isaiah 52:8 Thy watchmen shall lift up the voice; with the voice together shall they sing: for they shall see eye to eye, when the Lord shall bring again Zion.Isaiah 52:10 The Lord hath made bare his holy arm in the eyes of all the nations; and all the ends of the earth shall see the salvation of our God.Isaiah 52:12 For ye shall not go out with haste, nor go by flight: for the Lord will go before you; and the God of Israel will be your rereward.

    idahoreb 02:13:29 PM Apr 12 2009

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    www.quicktripexpress.net Quick Trip Express Inc. has been in business since 1983, Quick Trip Express Inc. is now ready to sell franchise's, for more information go to www.quicktripexpress.net Quick Trip Express Inc. has been a home based office since 1983 and will work for anybody as a home based office

    amcountertopfab 01:34:40 PM Apr 12 2009

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    What this president and his know nothing adminstration need to realize is that every thing that he does to please the activist groups that elected, generally causes a large loss of jobs.. Trying to force increased unionism and protecting the UAW is killing the economy. He gets rid of GM's ceo because the UAW refuses to give in? That was real bright. The UAW has had a gun to GM's head for years, forcing them to accept these high pay contracts by threatening to strike. I have been there and I speak the truth! Obama's objective seems like he is trying to kill business for some misguided reason. His environmental objectives while honorable, can't be applied with a hammer and it is blatantly stupid to raise the taxes on businesses and people who provide the means for Americans to make a living. Nothing is forcing these businesses and wealthy people to live here, just so they can pay higher taxes. When the move they generally take their money with them. A number have moved already.

    sdebber54 11:43:48 PM Apr 07 2009

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    jp You right that was in old my country. Everybody in village were working in community as trench diggers with showels, preparation for their "RED BOSSES'(Their union ) holiday 1st May parade. If You like to go to college, work on troyley tracks(best tool showel),Sovehoses agricultural coverment farms. People it is come slovely but shure. All ander goverment upper class (Burocrats which were glued to chairs).This wasn't working in past end never will work now. 50 yrs at most. Scary.

    tucsonauto 06:16:06 PM Apr 07 2009

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    NO ONE EVER COMPLAINED ABOUT A WHITE PRES GOING ON TRIPS WHAT ABOUT THE CLINTON'S I DID NOT VOTE FOR OBAMA BUT WHAT'S THE DIFFERANCE IF BLACK OR WHITE AND ABOUT THE BIG TAX FOR THE SMALL BUSINESS IS ALSO WRONG WE TAKE THE RISK AND ALSO PAY THE PRICE ESPIECIALLY RIGHT NOW THERE IS NOT MUCH BUS. AND WE STILL HAVE TO PAY

    startnowcareers 04:54:34 PM Apr 07 2009

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    Do you have "Digital Dirt"? Visit http://startnowcareers.blogspot.com

    startnowcareers 01:05:01 AM Apr 04 2009

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    If you're faced with unemployment, you'll find everything you need to get started again at: http://www.startnowcareerguide.com

    onedustfarmer 09:18:45 PM Apr 03 2009

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    I was watching the history channel (Valkarie-sp?) and saw how Hitler came about; I actually learned some German history on the Berlin wall. I am concerned about Obama and what he is taking from us Americans due to some Americans not understanding what is happening in the name of partisan. I am a proud Republican, but be us a Republican or Democrat we all have a lot to loose in a despotic-socialist republic. When I was younger, youth could hardly wait to exit California to Oregon or Colorado. If today's change gets too radical I'm wondering if those places are not far enough away. I see an exodus to other countries to escape the bullsh... of today. Obama was/is a shallow and poor choice by all who filled out a ballot in support of a change, that may very well ruin our beloved America forever. We didn't have a lot to choose from in the election but the means to a sad end may have been choosen. Sadly!

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