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Small Business Act Signed
• The limit for the Section 179 election to expense business equipment purchases is immediately increased from $112,000 to $125,000, with phase-out limit increased to $500,000.
• The Work Opportunity Tax Credit for hiring certain disadvantaged workers was set to expire at the end of 2007.
• The FICA tip credit will continue to be based on the old $5.15 minimum wage even though the minimum wage increases to $7.25 an hour.
• Married couples who jointly operate an unincorporated business and who file a joint return may elect not to file a partnership return. Instead, they can each report their income on Schedule C of Form 1040.
• The age limit for the "kiddie tax," the taxing of a child's unearned income above a certain amount at the parents' higher rate, is increased from age 18 to 19. For full-time students, the kiddie tax will apply until age 24. This change is generally effective starting in 2008.
• Other provisions will affect S corporations and taxpayers recovering from Hurricane Katrina. To review how this law could affect your business and personal tax planning, give us a call.
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