Jim Kendall for the DailyHerald.com writes: There are some small business — and small business owner — tax
positives in 2013, but there also are some issues that make a
conversation with your CPA, and maybe your estate attorney, a good idea. That's the gist of post-April 15 conversations with two
leading CPAs: Tony Massaro, tax partner at Porte Brown LLC, Elk Grove
Village; and Dean Holland, president of Holland and Co., Naperville.
With an admonition to check with your own tax adviser about your
particular situation, let's start with two of the positive 2013 tax
issues:
• An extension of the Section 179 deduction was included in
the American Taxpayer Relief Act, made retroactive for 2012 and, more
importantly, holds for the current tax year. The Section 179 extension,
Massaro says, allows businesses to write off the full cost of qualifying
new or used equipment purchased this tax year — up to a maximum
write-off of $500,000.
There's a $2 million cap on the total purchase. Larger businesses that exceed the $2 million cap can take a
bonus deprecation of 50 percent of the amount over $2 million, Massaro
says.
• The same legislation, signed into law January 2, made the
Bush-era estate tax exemption permanent. This year the exemption is
$5.25 million.
However, Holland warns that "States don't always follow the
federal rules." The Illinois estate tax deduction is $4 million, he
says, which means you might want to visit with your estate planning
attorney — and your CPA.
Although action on the Section 179 extension and the estate
tax exemption are good news, the rest of the tax news for 2013 is less
happy.
• Income tax rates have gone back to the pre-Bush years,
Holland says, pushing the top rate to 39.6 percent on taxable income
over $400,000.
• Taxpayers in the highest brackets also will be hit with an
increase in the long-term capital gains rate, to 20 percent from 15
percent.
• There's a new 3.8 percent Medicare tax on unearned income —
essentially interest, rents and royalties — for higher-earning
taxpayers; the Social Security wage base increased by $3,600 to
$113,700; and the Social Security withholding tax cut expired at
year-end 2012.
Not everyone may suffer right away from higher tax rates.
Massaro notes, for example, that "A lot of people accelerated income
into 2012 to take advantage of last year's lower rates."
Nonetheless, the almost inevitable uncertainty in Washington
pertaining to anything fiscal means 2013 may be an especially "good
year to sit and do some planning" with your CPA, Massaro says.
If you sell online, the potential impact on your business of
an Internet sales tax likely should be part of the discussion. So
should tax rates and initiatives in states where you conduct business
more traditionally; virtually every state is looking to collect
additional revenue.
Monday, April 29, 2013
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