Do not forget… especially Start Ups!!
On May 24, 2010 in Tax Revenues
- R&D Credit – Election must be made on original Timely returns
A taxpayer can have both credit and the deduction only if the 280c election is made on the original timely return. The R&D credit requires that taxpayers satisfy four requirements, or tests, to qualify. First, develop a new or improved business component (e.g. software). Second, work must be technological in nature. Third, there must be uncertainty. And, finally, you must engage in a process of experimentation for a permitted purpose.
-5 Year Carryback of Net Operating Loss
The new provision enables small businesses with a net operating loss in 2008 or 2009 to elect to offset this loss against income earned in up to five prior years. Typically, an NOL can be carried back for only two years. With the economic downturn and the new law, the IRS expects record numbers of small businesses to be eligible for the refunds. Small businesses with large losses may be able to benefit fully from those losses now, rather than waiting until claiming them on future tax returns
March 15, 2010 – Corporate Tax Returns for FYE Dec 31 or request for 6 month extension
Deadline for corporate tax returns (Forms 1120, 1120A, and 1120S), or to request automatic 6-month extension of time to file (Form 7004).
Other Recovery Act Credits/Benefits-
1. Work Pay Credit
Government provides a work pay credit to extent of $400 (single filers) and $800(filing jointly). This credit appears as reduced withholding of federal tax if you are a salaried employee. If you are a self employed person, then you can adjust the credit in your income tax form for 2009.
2. Sales tax deduction for new car buyers
Any purchase of a qualified new car, light vehicle, recreational vehicle or motorcycle made after February 16, 2009 till end of the year, can claim a deduction for the state, local, sales and excise taxes paid on up to $49,500 of the purchase price. Special tax break for new car purchases in States with no Sales Tax.
3. First time Home Buyers credit
First time home buyers can claim credit up to $8,000 for home bought during January 1, 2009 to May 1, 2010 if it is used for primary residence. If the buyers sellers the home within 3 years of the purchase the credit amount has to be paid back to the IRS.
4. Hope Scholarship Tax credit
It is made partially refundable — meaning that a tax filer could get money back even if it meant he or she would be getting back more from Uncle Sam than paid in federal income tax. The credit is worth up to $2,500 for higher education expenses, up from $1,800 previously.
IRS guidelines of standard mileage rate (SMR)
The standard mileage rate (SMR) is kind of depreciation method. The SMR basically computes the fixed and variable operating cost of using the vehicle for business by multiplying the number of business miles traveled during the year by the standard business mileage rate given by the IRS. For 2009, this standard business mileage rate is 55 cents per mile and for 2010 it is 50 cents per mile. If you have used any other depreciation method for your vehicle then you are not allowed to use SMR method. This method is not available for vehicle used for hire or for more than four vehicles used simultaneously.
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