tax credit

Tax

2012 Tax Changes for Businesses

Whether you file as a corporation or sole proprietor here’s what business owners need to know about tax changes in 2012.

Standard Mileage Rates 
The standard mileage rate in 2012 is 55.5 cents per business mile driven, 23 cents per mile driven for medical or moving purposes, and 14 cents per mile driven in service of charitable organizations.

Health Care Tax Credit for Small Businesses 
Small business employers who pay at least half the premiums for single health insurance coverage for their employees may be eligible for the Small Business Health Care Tax Credit as long as they employ fewer than the equivalent of 25 full-time workers and average annual wages do not exceed $50,000. The credit can be claimed in tax years 2010 through 2013 and for any two years after that. The maximum credit that can be claimed is an amount equal to 35% of premiums paid by eligible small businesses.

Credit for Hiring Qualified Veterans
The maximum credit that employers can take for hiring qualified veterans in 2012 is $9,600 per worker for employers that operate for-profit businesses, or $6,240 per worker for tax-exempt organizations. See Tax Credit for Employers Hiring Veterans This Year (below) for additional details on this tax credit.

Section 179 Expensing 
In 2012 the maximum Section 179 expense deduction for equipment purchases is $139,000 ($174,000 for qualified enterprise zone property) of the first $560,000 of certain business property placed in service during the year. The bonus depreciation is 50% for qualified property that exceeds the threshold amount.

Please contact us if you need help understanding which deductions and tax credits you are entitled to. We are always available to assist you.

Tax

Expanded Adoption Credit

For 2012 the maximum adoption credit per eligible child is $12,650, down from $13,360 in 2011. The credit is no longer refundable and must be used as a credit against tax liability. In general, the credit is based on the reasonable and necessary expenses related to a legal adoption, including adoption fees, court costs, attorney’s fees, and travel expenses. Special needs adoptions are eligible for the full credit regardless of whether expenses are qualified.

In order to claim the credit however, your modified adjusted gross income (MAGI) must be less than $229,710. This credit is set to expire on December 31, 2012, but can be carried forward over the next five additional years until the credit is used up or the time limit expires. Moving forward, in 2013 domestic adoptions of special needs children are eligible for a tax credit of $6,000.

If you adopted a child this year, or are planning to adopt a special needs child in 2013, you may be eligible for this credit. Additionally, if you adopted a child in 2010 or 2011 and didn’t claim the refundable credit, you may be able to file an amended return. Be sure to contact us if you need assistance. We are here to help.

Accounting Tax

Check Your Withholdings

With less than two months remaining in the calendar year, it’s a great time to double check your federal withholding to make sure enough taxes are being taken out of your pay.

The average refund for 2010 was just over $3,000. Although in part due to tax credits associated with the economic stimulus package, it’s still an increase of nearly 10 percent from the previous year. In addition, even though the Making Work Pay Tax Credit lowered tax withholding rates in 2010 for millions of American households, some workers and retirees still need to take steps to make sure enough tax is being taken out of their checks.

Certain folks should pay particular attention to their withholding. These include:

  • Married couples with two incomes
  • Individuals with multiple jobs
  • Dependents
  • Some Social Security recipients who work
  • Workers who do not have valid Social Security numbers
  • Retirees who receive pension payments

Taxpayers who wind up owing too much tax because not enough money was withheld from their paychecks during 2011 may qualify for special relief on a penalty that sometimes applies. Depending on their personal situation, some people could have less withheld from their paychecks than they need or want.

Failure to adjust withholding could result in potentially smaller refunds or, in limited instances, a taxpayer may owe tax rather than receive a refund next year.

If you’re not sure how much you need to withhold from your paycheck, just give us a call and we’ll figure it out with you.

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Copyright All rights Reserved. Financial Dream Team, like all providers of personal financial services is required by law to inform their clients of their policies regarding privacy of client information. The information in this material is not intended as tax or legal advice. Financial Dream Team, USA, LLC is a registered business in Califronia. Provided content is for informational purposes only.

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