Small Business Jobs Act – A Look at the Benefits
On September 27, 2010, President Obama signed the Small Business Jobs Act of 2010 into law – a $42 billion bill in tax cuts, increased loans, and other measures. The bill is designed to prop up small businesses so they can create more jobs.
Many of the Act’s provisions have already kicked in – which means it’s time to learn how they benefit you.
More Loan Money Available
The main focus of the Small Business Jobs Act is to help small businesses get loans. Here are the three major ways the Act makes loan money available to small business owners.
SBA Recovery Loans. The American Recovery and Reinvestment Act of 2009 (the Recovery Act) was last year’s attempt by Congress to aid struggling small businesses. The Jobs Act of 2010 extends some of the Recovery money. With the passage of the Jobs Act, the Small Business Administration began funding new Recovery loans within a few days of the president’s signature.
7(a) and 504 Loans. These are the two largest SBA loan programs, and under the Jobs Act, they got a huge boost.
The bill increased the maximum 7(a) and 504 loans from $2 million to $5 million, and the maximum 504 manufacturing-related loan from $4 million to $5.5 million.
Increased Capital to Community Banks. The Jobs Act established a $30 billion fund, run by the Treasury Department, that extends ultra-cheap capital to community banks with incentives to lend to small businesses. This means higher loans – with better guarantees – are now available at your local bank.
Tip: Now is an excellent time to explore your borrowing options – whether it’s through a national organization like the Small Business Administration or your hometown lending institution.
Don’t miss out on the chance to use some of this capital for your business. Give us a call to talk over your needs.
Tax Cuts, Credits, and Breaks
The Small Business Jobs Act includes $12 billion in tax incentives. Take a look at the top six:
- The elimination of capital gains tax on certain small business investments if they’re held for five years.
- Higher limits on the amount of investments small business owners can write off for 2010 and 2011.
- The extension of a Recovery Act provision that allows for a 50% bonus depreciation. This means small businesses can deduct capital expenditures on certain investments.
- The ability to deduct all of your health insurance payments for you and your family when figuring your self-employment tax.
- An increase in the amount entrepreneurs can deduct for start-up expenses for this year.
- The ability to offset tax liabilities for five years by carrying back general business credits.
Less Red Tape
Some of the Act’s benefits reside in reduced paperwork and clearer regulations, which allow you to take advantage of tax breaks much more easily.
Deduct Your Cell Phone Simply. Previous policies required lots of documentation to deduct charges from an employer-provided cell phone. With onerous and confusing paperwork, you had to prove you used the mobile device for business purposes more than 50% of the time.
The Small Business Jobs Act addresses this headache. The legislation removes cell phones from the Internal Revenue Code’s definition of “listed property.”
What does this mean for the small business owner? It’s now much less complicated to deduct the use of your mobile phone on your taxes.
Tip: Other telecommunications devices have also been removed from “listed property,” including Blackberries and PDAs.
Limited Penalties. The bill limits the penalty for failing to report a transaction that the IRS has formally identified as an abusive tax shelter. The penalty is set at 75% of the tax benefit and capped at $200,000 for corporations and $100,000 for individuals.
Questions?
Do you have questions about how to take advantage of the Jobs Act’s provisions? Make an appointment to meet with us. We’re eager to help you claim the capital you need for your business.
Small Business Jobs Act – A Look at the Benefits
On September 27, 2010, President Obama signed the Small Business Jobs Act of 2010 into law – a $42 billion bill in tax cuts, increased loans, and other measures. The bill is designed to prop up small businesses so they can create more jobs.
Many of the Act’s provisions have already kicked in – which means it’s time to learn how they benefit you.
More Loan Money Available
The main focus of the Small Business Jobs Act is to help small businesses get loans. Here are the three major ways the Act makes loan money available to small business owners.
SBA Recovery Loans. The American Recovery and Reinvestment Act of 2009 (the Recovery Act) was last year’s attempt by Congress to aid struggling small businesses. The Jobs Act of 2010 extends some of the Recovery money. With the passage of the Jobs Act, the Small Business Administration began funding new Recovery loans within a few days of the president’s signature.
7(a) and 504 Loans. These are the two largest SBA loan programs, and under the Jobs Act, they got a huge boost.
The bill increased the maximum 7(a) and 504 loans from $2 million to $5 million, and the maximum 504 manufacturing-related loan from $4 million to $5.5 million.
Increased Capital to Community Banks. The Jobs Act established a $30 billion fund, run by the Treasury Department, that extends ultra-cheap capital to community banks with incentives to lend to small businesses. This means higher loans – with better guarantees – are now available at your local bank.
Tip: Now is an excellent time to explore your borrowing options – whether it’s through a national organization like the Small Business Administration or your hometown lending institution.
Don’t miss out on the chance to use some of this capital for your business. Give us a call to talk over your needs.
Tax Cuts, Credits, and Breaks
The Small Business Jobs Act includes $12 billion in tax incentives. Take a look at the top six:
- The elimination of capital gains tax on certain small business investments if they’re held for five years.
- Higher limits on the amount of investments small business owners can write off for 2010 and 2011.
- The extension of a Recovery Act provision that allows for a 50% bonus depreciation. This means small businesses can deduct capital expenditures on certain investments.
- The ability to deduct all of your health insurance payments for you and your family when figuring your self-employment tax.
- An increase in the amount entrepreneurs can deduct for start-up expenses for this year.
- The ability to offset tax liabilities for five years by carrying back general business credits.
Less Red Tape
Some of the Act’s benefits reside in reduced paperwork and clearer regulations, which allow you to take advantage of tax breaks much more easily.
Deduct Your Cell Phone Simply. Previous policies required lots of documentation to deduct charges from an employer-provided cell phone. With onerous and confusing paperwork, you had to prove you used the mobile device for business purposes more than 50% of the time.
The Small Business Jobs Act addresses this headache. The legislation removes cell phones from the Internal Revenue Code’s definition of “listed property.”
What does this mean for the small business owner? It’s now much less complicated to deduct the use of your mobile phone on your taxes.
Tip: Other telecommunications devices have also been removed from “listed property,” including Blackberries and PDAs.
Limited Penalties. The bill limits the penalty for failing to report a transaction that the IRS has formally identified as an abusive tax shelter. The penalty is set at 75% of the tax benefit and capped at $200,000 for corporations and $100,000 for individuals.
Questions?
Do you have questions about how to take advantage of the Jobs Act’s provisions? Contact me. I’ll help you claim the capital you need for your business.
Saving for College – 529 Plans
What is a 529 plan? 529 plans are investment vehicles designed to help families pay for future expenses associated with college or other qualified post-secondary training. Though contributions to a 529 plan are not deductible, these plans offer other tax advantages. All 50 states and the District of Columbia sponsor at least one type of 529 plan.
Computer technology expansion continues in 2010. The American Recovery and Reinvestment Act of 2009 (ARRA) added computer technology to the list of college expenses (tuition, books, etc.) that can be paid for by a 529 plan. For 2009 and 2010, the law expands the definition of qualified higher education expenses to include expenses for computer technology and equipment or Internet access and related services to be used by the designated beneficiary of the 529 plan while enrolled at an eligible educational institution. Software designed for sports, games, or hobbies does not qualify, unless it is predominantly educational in nature.
More on “computer technology or equipment.” This phrase refers to computers and related peripheral equipment. Related peripheral equipment is defined as any auxiliary machine (whether online or offline) that is designed to be placed under the control of the central processing unit of a computer, such as a printer. This does not include equipment of a kind used primarily for amusement or entertainment. “Computer technology” also includes computer software used for educational purposes.
Note: Congress created 529 plans in 1996. They’re named after Section 529 of the Internal Revenue Code. The legal name for 529 plans in the tax code is “qualified tuition programs.”
Why use a 529 plan? There are several advantages of 529 plans and one may be applicable to your family’s needs. Earnings are not subject to federal tax when used for eligible college expenses. Earnings are often not subject to state tax. States may offer other incentives to in-state participants. There are no income restrictions on individual contributors. Contributions are only limited by the qualified education expenses of the beneficiary. You can change the beneficiary of a plan if the new beneficiary is in the same family. You can open a plan benefiting anyone: a relative, a friend, or even yourself. The plan owner or custodian controls the funds until withdrawal, not the beneficiary.
How 529 plans are structured. There are two basic types of 529 plans – prepaid tuition plans and savings plans. A prepaid tuition plan enables a family to pay for future tuition now in current dollars and prices. A savings plan enables a family to accumulate funds in a tax-advantaged way for future tuition costs. A 529 plan can be established and maintained by a state, a state agency, or an eligible educational institution. Each 529 plan is somewhat unique. Some state-sponsored plans offer incentives to in-state participants, such as state-income-tax deductions or credits. Each 529 plan has one custodian and one beneficiary. A student or future student can be the beneficiary of more than one 529 plan.
Contribution limitations. Contributions cannot exceed the amount necessary to provide for the qualified education expenses of the beneficiary. Contributors should be aware of potential gift tax issues if the amount contributed by any one contributor during a year to a given beneficiary, together with other gifts to that beneficiary, is greater than $13,000.
Use with other aid. A family using a 529 plan to pay for some of a child’s college expenses may still be eligible to claim either the American opportunity credit or the lifetime learning credit.
More Questions? If you have questions about educational savings plans or would like some guidance on setting up the appropriate plan please contact me. You can also check out my web page Tax Benefits of Higher Education: Frequently Asked Questions.
Avoiding Refund Delays
The IRS has provided this very important information. Please note this is directly from:
Five Tips for Avoiding Refund Delays Relating to Your Economic Recovery Payment
The $250 Economic Recovery Payments that were issued in 2009 by the Social Security Administration, Department of Veterans Affairs and Railroad Retirement Board must be included when claiming the Making Work Pay Tax Credit on 2009 tax returns. Many people who worked during 2009 and also received a $250 Economic Recovery Payment in 2009 are slowing down their tax refunds by not properly including the payments when claiming the Making Work Pay Tax Credit.
Here are five tips from the IRS that will help you avoid these refund delays:
- If you worked during 2009, you may be eligible to claim the Making Work Pay Tax Credit that was established by the American Recovery and Reinvestment Act of 2009 and is worth up to $400 for individuals and $800 for married couples.
- The Economic Recovery Payments are not taxable income; however, anyone who receives social security, veteran or railroad retirement benefits, as well as certain other government retirement benefits, must reduce the Making Work Pay Tax Credit they claim by the amount of any payment they received in 2009.
- Taxpayers with earned income should claim the credit by attaching Schedule M to their 2009 income tax return.
- To help avoid delays when you claim the credit, make sure you properly report your Economic Recovery Payment on IRS Schedule M, Making Work Pay and Government Retiree Credits.
- If you are not certain whether you received the $250 payment, you should verify that information by contacting the appropriate agency before preparing and filing your tax return and claiming the Making Work Pay Tax Credit.
More information about the Economic Recovery Payment and the Making Work Pay Tax Credit can be found at IRS.gov/recovery. Schedule M and the related instructions can be obtained at IRS.gov or can be ordered by calling 800-TAX-FORM (800-829-3676).
Links:
- The American Recovery and Reinvestment Act of 2009: Information Center
- Schedule M, Making Work Pay and Government Retiree Credits
Additional Contact Information:
- Social Security Administration - Toll free Number: 800-772-1213
- Department of Veterans Affairs – Toll Free Number: 800-827-1000
- Railroad Retirement Board
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