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.
• Jim Kendall welcomes comments at Kendall@121MarketingResources.com
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