By Harvey Amwake, C.P.A.
It seems that we all survived the “fiscal cliff” legislation that was finalized early in 2013. Small businesses survived especially well, with many of the “prior” beneficial tax provisions extended into 2013 and beyond. Here are a few of those business provisions that you should be aware of as a business owner.
Asset expensing. This provision allows businesses to fully expense the purchase of many assets (such as equipment, furnishing, technology, etc.) in just one year, rather than being required to depreciate (deduct) their cost over a number of years. Up to $500,000 of these purchases can be immediately expensed in the year of purchase.
Bonus depreciation. If you hit your expensing limit, you can always fall back on bonus depreciation, which allows you to deduct 50 percent (and sometimes more) of certain types of assets in the first year of purchase. This provision was set to expire at the end of 2012, but has now been extended through 2014.
Work opportunity tax credits. These are tax credits (which are much more valuable than tax deductions) available to employers who hire certain individuals. They include military veterans, people receiving government assistance, or those living in distressed areas. These credits were set to expire, but have now been extended through 2013.
Qualified improvement depreciation. Under these provisions, restaurant, retail, and other rental property improvements can qualify for 15-year depreciation, rather than the required 39-year depreciation rate. But note that these provisions are set to expire at the end of 2013.
Health care tax credit. If you pay medical insurance premiums for your employees, you could be allowed a tax credit for a portion of premiums paid.
For a complete review of tax breaks now available for your business, talk with your financial adviser or contact our office.