Washington Watch - January 14, 2010


Washington Watch - January 14, 2010

Survey: Will You Be Hiring In 2010?

One of the reminders of our sluggish economy is the current number of unemployed Americans. As unemployment remains high, Congress and the Obama Administration are focusing their attention on job creation. Small business is front and center in this debate as lawmakers hope to encourage this important business demographic to expand and hire new employees in 2010.

Please click here to take the survey and let us know what you think.

Packed Agenda Remains For Congress

Members of Congress return to Washington, D.C. to find a packed agenda in January. At the top of that list is a compromise between the two chambers on their health reform bills.

Democrats have been working together to resolve these differences, so that the final bill can be sent to President Obama. The House bill contains a surtax on the nation's high earners, which many Senate Democrats oppose. House Democrats are also taking major issue with the Senate bill, which will prove to be challenging as conservative Democrats and practically all Republicans are mounting campaigns against the legislation as a whole.

At the heart of these negotiations, Democrats have been working to decide how to address the details of the proposed Health Insurance Exchanges and whether it would be national or state-based.

Stay tuned to NASE.org for the latest updates on the health care debate.

2009 Tax Changes For Micro-Businesses

Prior to preparation of the 2009 tax forms, the self-employed and micro-businesses (fewer than 10 employees) should be aware of a few tax law changes, including alterations to the standard mileage rate and the self-employment tax.

“January is a great time to get a jump on your 2009 tax return,” said Keith Hall, national tax advisor for the NASE. “The earlier a business owner can get organized, the more likely he or she will have the time to investigate eligibility requirements for additional tax benefits.”

The following tax law changes relate to 2009 returns:

  • Homebuyer Credits – If you operate a business from an office in your home, you may be eligible for additional tax incentives. Depending on when the home was purchased and how long you lived in a prior residence, you may be eligible for a credit of up to $8,000. The credit is similar to an interest-free loan.
  • Making Work Pay Tax Credit – Many taxpayers will qualify for a making work pay credit of $800, if married filing jointly, or $400 for other taxpayers. The credit is equivalent to 6.2 percent of earned income up to the maximum amount. Speak to your tax practioner to find out if you qualify.
  • Standard Mileage Rates Adjusted for 2009 – Business owners using their vehicle for company business can deduct 55 cents per mile driven on their 2009 tax return. The rate has also been set for 2010 at 50 cents per mile.
  • Contribution Limits for IRAs and Other Retirement Plans - Where an IRA contributor who is not covered by a workplace retirement plan is married to someone who is covered, the deduction is phased out if the couple’s income is between $167,000 and $177,000.
  • Self-Employment Tax Changes – The tax rate for self-employed business owners remains at 15.3%, though the income threshold has increased to $106,800. All net earnings from self-employment of at least $400 are subject to the Medicare part of the tax.
  • AMT Exemption Increased for 2009 – For tax-year 2009, the exemption for a married couple filing a joint return is $70,950; $35,475 for a married person filing separately, and $46,700 for singles and heads of household. Children who earn less than $6,700 are not subject to the AMT.

Worried you will be unable to meet your tax obligation? It is important that you still file your return even if you are unable to pay the tax. Contact the IRS at 1-800-829-1040 as soon as possible if you foresee tax payment difficulties. The agency will work with you to discuss your options.

In preparation for the filing deadline, self-employed business owners can turn to Hall and other qualified CPAs for help through NASE’s TaxTalk program here. While there, they can submit a tax question and browse the TaxTalk resource library.

Find out more information about these and other tax law changes for the 2009 tax season at www.IRS.gov.

SBA's Report To President On Small Biz Financing

The Small Business Administration (SBA) sent recommendations to the White House compiled from a series of meetings regarding how to better equip small businesses to weather rough economic patches.

Participants in the Small Business Financing Forum – small businesses, lenders, policymakers and regulators – suggested a range of ideas aimed at supporting access to credit and job creation for small businesses. In addition, recommendations were given on how to expand and improve SBA programs that serve small businesses. Ideas included expanding the scope, size and reach of existing SBA programs through increasing program limits, reaching out to new lenders and borrowers, streamlining processes and procedures and strengthening critical counseling and technical assistance programs.

Participants in the conference suggested ways that Treasury could use funds provided under the Emergency Economic Stabilization Act (EESA) to support small business lending. Many of these ideas involved smaller banks and Community Development Financial Institutions (CDFIs).

Ideas concerning how tax policy might be used to encourage access to credit and job creation for small businesses were also presented. In particular, participants suggested providing tax incentives or making other changes to tax policy that would encourage lenders or investors to provide small businesses with greater access to capital.

Conference participants – especially in a panel session that focused on access to credit in distressed communities – described how small businesses and entrepreneurs in low‐income and other disadvantaged communities often face challenges accessing credit that are even deeper than in other areas.

Read the entire report here. View the Forum with optional Closed Captioning here.

IRS Proposes New Rules For Tax Preparers

The IRS estimates that over 80 percent of American households use a tax preparer or tax software to help them prepare and file their taxes. The agency has proposed greater outreach and education efforts to help tax preparers obtain the most up-to-date information for future filing seasons and a number of tips to help taxpayers choose a qualified preparer this season.

Based on the results of the recently conducted Return Preparer Review, the IRS has recommended the following:

  • Require all paid tax return preparers who must sign a federal tax return to register with the IRS and obtain a preparer tax identification number (PTIN). These preparers will be subject to a limited tax compliance check to ensure they have filed federal personal, employment and business tax returns and that the tax due on those returns has been paid.
  • Require competency tests for all paid tax return preparers except attorneys, certified public accountants (CPAs) and enrolled agents who are active and in good standing with their respective licensing agencies.
  • Require ongoing continuing professional education for all paid tax return preparers except attorneys, CPAs, enrolled agents and others who are already subject to continuing education requirements.
  • Extend the ethical rules found in Treasury Department Circular 230 -- which currently only apply to attorneys, CPAs and enrolled agents who practice before the IRS -- to all paid preparers. This expansion would allow the IRS to suspend or otherwise discipline tax return preparers who engage in unethical or disreputable conduct.

More details on the report are available here.

Washington Watch Online
Visit NASE Advocacy to view archived editions of Washington Watch. While you’re there, read the latest updates from the Washington, D.C. office, write your Congressperson, and find out how you can join the fight for micro-business.

Courtesy of NASE.org