New Tax Laws for Small Business

Sunday, May 27, 2007 at 2:26PM
Joey Brannon in Tax

Last week the President signed the Small Business and Work Opportunity Tax Act. Part of a package that provides money for troops and an increase in the minimum wage this law contains some provisions of interest to small business owners.

• Rise in the federal minimum wage to $7.25 per hour (up from 5.15).


• An increase in the 179 deduction for expensing business equipment purchases from $112,000 to $125,000. Additionally, businesses may purchase up to $500,000 of equipment and still qualify for the deduction (up from $450k).


• Married couples operating a jointly owned business previously had to file on Form 1065 as a partnership. The new law allows them to file as sole proprietors.


• The kiddie tax was expanded to include anyone under 19. They just can't leave this one alone. Last year it was raised from 14 to 18. Now, another increase. What's worse is that the new law allows the kiddie tax to be imposed on full time students until they reach age 24. This means that the child's unearned income (interest, dividends, etc) must be taxed at the parent's rate.

Article originally appeared on Axiom CPA, P.A. (http://www.axiomcpa.com/).