Changes in tax code could mean savings
With the IRS tax deadline a little more than a month away, small businesses and millions of households may benefit from new wrinkles in the tax code for 2008 returns.
Among those affected by the changes are people who had trouble paying their mortgage, first-time homebuyers and businesses that lost money in 2008, said Greg Rosica, a tax partner at accounting firm Ernst & Young.
“There’s significant changes to the tax code this year,” said Rosica, a contributing author to the Ernst & Young Tax Guide. “Whether there’s benefits or not depends upon your situation and whether they’re applicable to you.”
Small businesses can take a write-off for up to $250,000 that they have spent on equipment such as computers or machinery, provided they have placed in service at least $800,000 in business assets, such as new equipment that they bought and are using, during the year.
And as part of a special depreciation bonus, businesses can additionally write off 50 percent of the value of many types of assets they put in service during 2008.
People with mortgage problems will no longer have to pay taxes on mortgage debt that has been forgiven by a lender. New legislation passed in 2008 excludes up to $2 million of such gains associated with a primary residence.
Fewer people should be subject to the alternative minimum tax on 2008 returns. The threshold has been raised to $69,950 for married couples and $46,200 for single filers, up from $66,250 and $42,550. The change is expected to affect about 20 million taxpayers.
Small businesses – defined for this purpose as those with gross receipts of $15 million or less – can carry back an operating loss for up to five years. Businesses can file a “carryback” form to request a refund from previous years’ returns.
Ernst & Young also highlights some of the most overlooked tax deductions, including:
- Cell phone costs used for business purposes if the filer is not reimbursed by the employer.
- Closing and commission costs on the purchase or sale of real estate.
- Resume preparation and outplacement costs by people looking for a new job.
- Education and training expenses related to keeping professional designations current.
- Safe deposit boxes used to hold investments.
- Gambling losses.
Tax season also is a good time to make sure your finances are in order for 2009, Rosica said.
In a provision of the economic stimulus bill, first-time homebuyers in 2009 qualify for a $8,000 tax credit. Previously, first-time homebuyers could receive a $7,500 tax credit, but the money had to be paid back over 15 years.
Steve Adams may be reached firstname.lastname@example.org.