IRS Announces New Tax Credits For Businesses
Over the past two years there have been unprecedented tax credits signed into law for small businesses to help empower our crippled economy. Billions of dollars for tax relief from the Recovery Act, the Job Creation Act, The Hire Act, and the Small Business Jobs Act, has helped businesses grow and create new jobs to help stabilize our fluttering economy.
According to the IRS the new small business tax credits are:
- Zero Capital Gains Taxes on Key Investments in Small Businesses
- Up to $500,000 Small Business Expensing Limit
- 100% Accelerated/Bonus Depreciation
- Tax Relief/Simplification for Cell Phone Deductions
- Increased Deduction for Entrepreneurs’ Start-Up Costs
- 5-Year Carry-back of General Business Credits
- Limitations on Penalties for Errors in Tax Reporting
- General Business Credit Not Subject to Alternative Minimum Tax
- New Health Care Tax Credits and Deductions
- A New Tax Credit for Hiring Unemployed Workers
The top tax cuts for small businesses are:
- Auto Expenses
Some of the cost for keeping business vehicles on the road can be fully deducted from small business taxes at the end of 2011. The standard mileage rate is 51 cents per mile, up from 50 cents in 2010.
- Expenses of Going Into Business
For 2011 a small business can deduct up to $5,000 for start-up cost
- Books and Legal and Professional Fees
Books for some businesses are considered a cost for doing business and are fully deductible
- Bad Debts
If a business provides goods, the cost of the goods lost can be deducted, but the cost of services provided by a business is not deductible.
- Business Entertaining
You may be able to deduct business-related entertainment expenses you have for entertaining a client, customer, or employee up to 50%
- Travel
Business expenses can be combined with pleasure trips if business was the main goal of the trip. These combined expenses are recognized as deductible expenses in 2011.
- Interest
Interest on business credit cards and loans are fully tax deductible in 2011. Also, if an owner takes out a personal loan and uses it for business purposes, this is tax deductible for the business.
Source: IRS.gov
