In September, Congress passed the Small Business Jobs Act of 2010. This is by no way a comprehensive profile of this complicated act, however this does highlight a few items that you might want to be aware of. Some of the business provisions I found interesting are: 1. In 2011, landlords are required to issue 1099 statements for paid services in excess of $600 to any vendor. Note: Penalties for not filing the 1099s double in 2011. 2. Sole proprietors, partners, and LLC members can deduct health insurance premiums before they calculate their self-employment tax. 3. The penalties for late filing of partnerships and S. corporation returns increases to $195 per partner, or shareholder, per month for 12 months. Note #2: Find a great accountant. What changes will affect you personally? 1. If you converted part or all of your traditional Individual Retirement Account (IRA) to a Roth IRA you can elect to pay a tax on the conversion in 2012 and 2013, rather than on the current return. 2. The Alternative Minimum Tax (AMT) exemptions dropped back to pre-2008 levels. This will surprise many middle-class Americans in 2010 as they carefully itemize but they will get hit with the AMT anyway. 3. You can still qualify for the 30% tax credit in 2010 for energy-saving improvements to your home. But, the maximum credit for 2010 and 2011 cannot exceed $1500. Solar energy credits are available through 2016. 4. The marriage penalty is back in 2011. Unmarried single tax filers will enjoy a lower tax liability than if they were married filing together. 5. Over-the-counter drugs are no longer qualified as medical expenses. (I know, I know, but I don’t write the tax code. So if you can get a prescription for Motrin instead of buying ibuprofen over-the-counter, does that count?) 6. The long-term capital gains rate increases to 20% in 2011, up from 15% for most income filers with capital gains. Dividends will be taxed at the ordinary rates. 7. In 2013, a new “Medicare tax” of 3.8% will be assessed on passive income or modified adjusted gross income for married filing jointly, or $200,000 for single or head of household. 8. The child tax credit drops in 2011 from $1000 to $500 per child. Childcare credits will also fall for most taxpayers. The tax laws changed quickly at the end of 2010. My advice? Accountants assume new importance with these tax changes. I am not an accountant, so please verify what you need to do with a qualified accountant. Good luck! Mary Kelly www.ProductiveLeaders.com
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