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Proposed 2014 Tax Changes for Businesses Making $250k per Year

We’ve all heard promises of no tax increases for individuals making over $250k a year, but what if you own a business that nets over $250k a year?

While few new tax laws have been confirmed for the year 2014, the White House has already submitted proposed changes in order to raise an additional $580 billion in revenue.  A chunk of that revenue will likely be coming from business owners.

Any proposed changes will need Congressional approval in order to become law, but some of the policies affecting business include the following:

Proposed Tax Changes

1. Denying tax deductions for punitive damages as well as deductions for expenses incurred in outsourcing a U.S. business or trade.

2. Increasing the Permanent Research Credit to 14% and making it permanent.
Business Taxes

3. Extending and making permanent the Work Opportunity Tax Credit for wages paid to qualified individuals who began work after December 31, 2013.

4. Taxing carried interests in partnerships, such as those found in hedge fund managers and private equity partners, at higher income tax rates, rather than at lower capital gains rates.

5. Giving all corporate aircrafts a seven year depreciation period, rather than just five for corporate jets that are not used in commercial aviation or to carry freight.

6. Providing a 10% tax credit for businesses with new jobs and wage increases.

7. A number of green tax credits for items such as investment in advanced energy manufacturing, permanent deductions for energy efficient commercial buildings, and repealing tax preferences for oil, gas, and coal production.

8. Doubling the maximum amount of deductions associated with start-up expenditures. Currently, they are $5,000 and would increase to $10,000 for tax years ending on or after the date of enactment. It also reduces the maximum amount of expenditures to $60,000.

9. If your business has more than ten employees and you do not offer a retirement plan, you will be required to enroll your employees in a direct deposit IRA that is compatible. Employers would get a tax credit of $25 per participating employee and a maximum of $250 per year for six years. Employees can choose to opt out of the IRA.

10. And last but not least, new rules may expand the number of employees needed for tax credits on employers who provide health insurance to 50 employees and phase out the restriction of only 20 employees.

The Future of the Proposals

These are just some of the proposed taxes affecting just businesses. There are many changes for individuals, estates, trusts, and other entities proposed annually. Time will tell which proposals will become law and which will be lobbied again for tax year 2015. However, for any of these to become actual tax law, they do need to pass both the Senate and House of Representatives.

To best see how these tax changes could affect you and to maximize your refund, be sure and speak to a CPA with experience in helping businesses like yours.

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