What are the major "2010 Tax Law Changes for 2010" that will significantly affect Small Businesses?
There were several changes tax law changes for 2010 that had a significant impact for small businesses. The following are the some of the most significant changes as follows;
1)A Change in the Business Mileage Rates
For the tax year 2010, the standard mileage rates for business use of vehicles decreased to 50 cents per mile driven. For medical and moving travel, the standard mileage rate is 16 cents per mile, while the miles driven for charitable organizations remains unchanged at 14 cents per mile.
2)Canceling Business Debt
The American Recovery and Reinvestment Act now allowed small businesses in 2010 to choose to delay the reporting requirements of income gained from the cancellation of debt, up to 5 years.
3)Domestic Production Activities
In an effort to boost domestic production activities, the deduction for qualifying income for domestic production now increases to 9% in 2010 for certain qualifying businesses.
4)Small Business Health Care Tax Credit
The tax credit will now be available to assist small businesses to afford the cost of covering employees with health care. But, this tax credit is only available “to business owners paying a minimum of half the cost of single health care coverage for employees.”
5)Employer and Employee Payroll Taxes for 2010
The maximum amount of wages subject to Social Security tax will remain the same as 2009 at $106,800. As in prior years, there is no limit to wages subject to the Medicare Tax, and earned wages (and self employed income) are still subject to the 1.45% tax. The FICA tax rate, which is the combined social security tax rate of 6.2% and the Medicare tax rate of 1.45%, still remains unchanged at 7.65% for 2010. Thus, the maximum social security tax that employees and employers will each pay in 2010 is $6,621.60.
6)First-Time Buyers with Home-Based Businesses
If a taxpayer purchases a first-time home and decided to operate his or her business from that home, that taxpayer can still qualify for an $8,000 tax credit, if the home was purchased before April 30, 2010.