Whether you file as
a corporation or sole proprietor here's what business owners need to know about
tax changes for 2016.
Standard Mileage
Rates
The standard mileage rates in 2016 are as follows: 54 cents per business mile driven, 19 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 $52,000 (adjusted annually for inflation) in 2016.
In 2016 (as in 2015
and 2014), the tax credit is worth up to 50 percent of your contribution toward
employees' premium costs (up to 35 percent for tax-exempt employers). For tax
years 2010 through 2013, the maximum credit was 35 percent for small business
employers and 25 percent for small tax-exempt employers such as charities.
Section 179
Expensing and Depreciation
The Section 179
expense deduction was made permanent at $500,000 by the Protecting Americans
from Tax Hikes Act of 2015 (PATH). For equipment purchases, the maximum
deduction is $500,000 of the first $2.01 million of qualifying equipment placed
in service during the current tax year. The deduction is phased out dollar for
dollar on amounts exceeding the $2 million threshold amount (indexed for
inflation) and eliminated above amounts exceeding $2.5 million. In addition,
Section 179 is now indexed to inflation in increments of $10,000 for future tax
years.
The
50 percent bonus depreciation has been extended through 2019. Business tax preparations are able to depreciate 50
percent of the cost of equipment acquired and placed in service during 2015,
2016 and 2017. However, the bonus depreciation is reduced to 40 percent in 2018
and 30 percent in 2019. The standard business depreciation amount is 24 cents
per mile.
Please call if you
have any questions about Section 179 expensing and the bonus depreciation.
Work Opportunity
Tax Credit (WOTC)
Extended through
2019, the Work Opportunity Tax Credit has been modified and enhanced for
employers who hire long-term unemployed individuals (unemployed for 27 weeks or
more) and is generally equal to 40 percent of the first $6,000 of wages paid to
a new hire. Please call if you have any questions about the Work Opportunity
Tax Credit.
We
provide traditional accounting and Year end
Tax planning to
individual and businesses from bookkeeping, payroll
processing, sales tax compliance
and annual tax returns but our focus is always to go beyond compliance and help
our client thrive by providing extended range of services that are rarely
offered by most CPA firms. Call the office if you need to file an extension or
file for late-filing penalty relief.
SIMPLE IRA Plan
Contributions
Contribution limits for SIMPLE IRA plans increased to $12,500 for persons under age 50 and $15,500 for persons age 50 or older in 2016. The maximum compensation used to determine contributions increases to $265,000.
Please contact the
office if you need help understanding which deductions and tax credits you are
entitled to.
Manen Kothari, CPA
serves in Schaumburg, Mount Prospects, Glendale Heights, Bartlett, Barrington
and Chicago as well as other areas of Downers Grove, Naperville, Des Plaines,
Elk Grove Village, Skokie and Addison. We are also efficient in showing you the
detailed deductions that can help you to limit your tax liabilities for the
next few years to come as long as we are at union with your business.
Call now: 847.524.0001
For More Information Visit: http://schaumburgcpa.info/
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