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Making the Most of a Taxing Situation

January 28, 2014 by Gary Stockton


The year 2014 promises to be a challenging one for business owners. So knowing how current tax laws will impact your company’s tax liability is essential. Here is a quick roundup of observations from tax professionals around the Internet:

Possibility of Lower Expensing Deductions – Unless Congress extends it, the expensing allowance for business equipment drops from $500,000 per year to $25,000.

Bonus Depreciation Expires – The 50% bonus depreciation for tangible business assets will also expire unless Congress extends it. Also reduced is the first-year maximum depreciation deduction for business autos and small trucks.

Simplified Home Office Deduction – Taxpayers can choose a simplified deduction for the business use of their home that is effective for tax years beginning in 2013 and continuing for 2014 and beyond of $5 per square foot with a maximum square footage of 300 for a maximum yearly deduction of $1,500.

Small Business Health Insurance Credit – The tax credit to employers of 25 or fewer equivalent full-time staff that provide an affordable health insurance plan and supplement at least half of the premiums will increase to 50% of the employer’s contribution in 2014. That’s up from 35% in 2013. For non-profit employers, the credit will be 35% in 2014.

Increased Payroll and Self-Employment Tax – As part of the new health care legislation, higher-income taxpayers are faced with an additional 0.9% health insurance (HI) tax. Starting in 2013, and continuing for future years, this surtax is imposed upon wage earners and self-employed taxpayers whose wage and self-employment income exceeds $250,000 for married taxpayers filing jointly ($125,000 if filing separately) and $200,000 for all others.

Longer Depreciation Life for Leasehold and Restaurant Property – The current 15-year depreciable life will increase to 39 years in 2014.

Qualified Small Business Stock Gain Exclusion – Beginning for qualified small business stock issued in 2014, the gain exclusion drops from 100% to 50%.

Qualified Real Property Expensing – Congress temporarily permitted the use of the Sec 179 expensing deduction to write off certain leasehold improvements, and restaurant and retail property improvements. Without Congressional intervention, this provision will no longer be available in 2014.

It’s always a wise choice to consult a licensed tax professional to determine the tax liabilities of your business. For more information about Experian’s advanced business-to-business products and services, visit www.experian.com/b2b.

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