As a follow-up to my previous installment on the 2009 tax changes, let’s talk about business impact with the upcoming tax law changes.
With the increase in the Section 179 allowance, businesses can write off faster something that they are depreciating. In fact, because of the limit change, they may be able to write off all of their expenditure for their taxes when they file their 2008 returns. The new ceiling of $250,000 is pretty high and if you have the expenditure that fits for your particular case, more power to you and your business.
There are rumors of hiring incentives in the form of tax credits (as proposed in the Presidential election, remember that?) of $3000 per new employee at the time of this blog going to employers in 2009 and beyond so that means for December, unless companies have to, they will hold off hiring anybody until 2009. If you are unemployed, be forewarned. The good news is that means starting in January 2009 look for the job markets to open up at least a little bit.
Companies should do what they can to get their income streams realized for 2008 since they are not sure what will happen with tax law changes for 2009. The incoming Administration will have to find a medium ground to not only get people employed but to get businesses profitable. We don’t want to have inflation problems but right now there are so many other issues that need to be resolved that is just another issue in the que.
Federal programs should be starting up to fill in the gap for dried up HELOCSand other loans that business people need to get their sole proprietorships going. There should be more coming out of the IRS website soon. If you are a business and have run out of funds from a bank hopefully another program should be coming up to fill in the gap. For the short term, go back to the lender and ask them what’s up especially since banks are getting bailed out.
If you live in a designated disaster area, you may want to crunch the numbers and see if it makes sense in what year you apply your losses. This would apply to the Midwestern Disaster Relief victims and any other designated Federal disaster area.
The usual rules of business apply as well. Depending on the nature of your gig, you may want to adjust orders for new goods or tweak your production levels to account for economic changes. That could mean that in some cases, if you are manufacturing things used for flood relief, for example, you may be making more portable shelters, etc than before.
Let’s see, what else…
Federal losses can be taken for this year and back two years. California losses currently have no carry back provision. That is expected to change though in 2011. Not much help now though.
Any debt that is forgiven has to be counted as income. This is a reminder for credit card debt as well as any other business debt that is forgiven.
I think that is all I can come up with. I am running on empty now…
If anybody else has anything they want to add or questions drop me a line or post and we will cover it.
Kim Isaac Greenblatt
Business Impact – Tax Changes for 2009 – Part II.
Tags: Business, Federal Taxes