New Deductions To Make Small Business Tax Season Less Taxing

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Hat tip to one of our co-workers, who sent us this excellent Boston.com article this morning.

With tax time running up on us like a money-grabbing ogre, it’s useful to know what’s changed for 2011. Thankfully, you’ll find a short list at the mobile-friendly link above. You are encouraged to check out the original article, but we’re happy to run down some of the rule changes right here.

  1. Using a health insurance deduction will drop your self-employment tax. If you’re a self-employed small business owner and you pay for your own insurance, this is a potentially large deduction you really need to look into.
  2. As the articles notes, the depreciation deduction you can take for any passenger vehicle is up to a robust $11,060, as is the deduction for trucks or vans used by your business. No matter which category your vehicle fits under, it needs to have entered use for the first time in 2010, so don’t try to deduct your ’74 Thunderbird. If you’ve ponied up for small business operating capital for a piece of equipment, it’s nice to know you might have a deduction coming.
  3. The higher expenses and depreciation limits for small businesses ought to raise an eyebrow. To wit, Boston.com says “small businesses can expense up to $500,000 of the first $2 million of certain business property placed in service during the year.” You can also deduct the value of property in its first year of service, rather than waiting to depreciate it over several years.

Be sure to give the article a read. What are your thoughts on these new rules?

Photo credit goes to http://mdrealestate.wordpress.com/

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