2009 Tax Breaks for Small Business
Finally a couple breaks that gives a bit of relief specifically for self-employed folks!
The American Recovery and Reinvestment Act (ARRA) has created a few tax breaks for 2009 that are only available this year, some with just a few months to take action and save taxes. Here are a couple you may want to take note of right now because they can have a quick impact on your cash flow.
Estimated Tax Requirements Modified
There are changes to the estimated tax requirements. This is welcome news since the next deadline is Monday, June 15th.
You can defer your estimated tax payments, paying a larger part of your 2009 estimate at the end of the year. The payment requirements have been modified as well.
Now you only need to pay in the lesser of 90% of your 2008 or your 2009 tax bill through estimated payments. The most significant qualification for this new rule is that more than half of your gross income in 2008 had to be from your small business.
Making Work Pay Credit for the Self-Employed
We’ve heard lots about how employees are getting the benefit of this new credit right now, but what about us?
The new credit is equal to 6.2% of your earned income, up to $800 (depending on your filing status). Of course, there is a phaseout of the credit for taxpayers with higher income (AGI over $75,000-$150,000). But if you qualify, you can take the credit now by deducting it from your estimated tax payments.
For directions on how to make the calculations, use Worksheet 2-9 on page 43 of Publication 505
For additional small business tax breaks that may apply to your business, check out the summary of ARRA small business info available directly on the IRS website.
