"They've got to keep their eyes open relative to what's happening on the budget level," Barbara Weltman, a tax attorney in Millwood, N.Y., and author of "J.K. Lasser's Small Business Taxes," said of business owners.
It's hard to run a business and keep up with tax law or economic stimulus legislation. That's a good reason to stay in touch with a tax or financial adviser whose job is to know what changes are coming down. And it's not just the federal government that's making adjustments; states are also passing laws, and some including California need to raise taxes to close budget deficits.
Some changes in federal tax law for this year are already known. The IRS Web site, www.irs.gov, has a section devoted to the provisions on its home page. Click on "Update on Recovery Tax Provisions for Individuals and Businesses." Or, you can go straight to changes aimed at small businesses by clicking on www.irs.gov/newsroom/article/0,,id
205330,00.html.
Among the small business provisions:
- Companies that incur net operating losses can carry them back five years instead of the usual two, applying those losses against taxes paid in the past and obtaining refunds.
- When making estimated tax payments, businesses are required to pay only 90 percent of their previous year's taxes, down from the usual 110 percent.
Weltman noted that this change may be a big help to companies. "What this does is improve cash flow," she said.
- The sharply higher deductions for new equipment purchases enacted for 2008 are being extended into 2009. One of these provisions is the Section 179 deduction, which allows small businesses to deduct upfront the cost of equipment such as computers, furniture, manufacturing machines and vehicles, up to $250,000. The second is the bonus depreciation measure that increases the portion of a purchase price that can be deducted for the first year.
