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2008 Tax Law Changes - Businesses : (For Quick Look Click here) |
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Increased Section 179 limits : |
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The maximum section 179 deduction you can elect for qualified section 179 property you placed in service in
tax years that begin in 2008 has increased to $250,000. This limit is reduced by the amount by which the cost of
section 179 property placed in service in the tax year exceeds $800,000. |
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S Corporation : |
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For tax years ending on or after December 31, 2007, certain corporations with reasonable cause for not timely
filing Form 2553, (Election by a Small Business Corporation), can request to have the form treated as timely filed by filing it as an attachment to Form 1120S, U.S. Income Tax Return for an S Corporation. |
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Self-Employed Health Insurance Deduction : |
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Partners and more-than-2% shareholders in an S corporation may be able to claim this deduction when the insurance policy is in the name of the partner or shareholder. You can either pay the premiums yourself or the partnership or S Corporation can pay them. However, if you pay the premiums yourself, you must be reimbursed by the partnership or S Corporation to claim the deduction. |
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Self-Employment Tax : |
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The maximum amount of net earnings subject to the social security part of the self-employment tax for tax years beginning in 2008 has increased to $102,000. All net earnings of at least $400 are subject to the Medicare part of the tax. |
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Standard mileage rate : |
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The Standard Mileage rate for the cost of operating your car for business use is : |
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1] 50.5 cents per mile for the period January 1 through June 30, 2008, and |
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2] 58.5 per mile for the period July 1 through December 31, 2008. |
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Quick Look: |
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Here's a quick review of some of the tax changes you'll see from 2007 to 2008 as a result of inflation adjustments and tax law changes. |
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Provision |
2008 |
2007 |
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Business equipment expensing deduction |
$250,000 |
$125,000 |
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Total purchase limit for full expensing deduction |
$800,000 |
$500,000 |
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Standard mileage rate for business driving (1/1/08 - 6/30/08) |
50.5¢ per mile |
48.5¢ per mile |
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Standard mileage rate for business driving (7/1/08 - 12/31/08) |
58.5¢ per mile |
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