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Posts Tagged ‘business tax preparation’
Tuesday, May 11th, 2010
Qualified Transportation Fringe Benefits – Bicycle Commuting Reimbursement
2009 Changes
After 2008, qualified transportation fringe benefits include any qualified bicycle commuting reimbursement.
Qualified bicycle commuting reimbursement. For any calendar year, the exclusion for qualified bicycle commuting reimbursement includes any employer reimbursement during the 15-month period beginning with the first day of the calendar year for reasonable expenses incurred by the employee during the calendar year.
Reasonable expenses include the purchase of a bicycle and bicycle improvements, repair, and storage. These are considered reasonable expenses as long as the bicycle is regularly used for travel between the employee’s residence and place of employment.
Exclusion from wages. Generally, the value of transportation benefits that you provide to an employee during 2009 are excluded from the employee’s wages up to the following limits.
For combined commuter highway vehicle transportation and transit passes:
$120 per month for the months of January and February 2009, and
$230 per month for any month beginning after February 2009.
$230 per month for qualified parking.
For a calendar year, $20 multiplied by the number of qualified bicycle commuting months during that year for qualified bicycle commuting reimbursement.
Qualified bicycle commuting month. For any employee, a qualified bicycle commuting month is any month the employee regularly uses the bicycle for a substantial portion of the travel between the employee’s residence and place of employment and does not receive transportation in a commuter highway vehicle, any transit pass, or qualified parking benefits.
Generally, qualified transportation fringe benefits are excluded from an employee’s wages even if you provide them under a compensation reduction agreement. However, qualified bicycle commuting reimbursements do not qualify for this exclusion if made under a compensation reduction agreement.
Qualified Transportation Fringe Benefits – Bicycle Commuting Reimbursement
2009 Changes
After 2008, qualified transportation fringe benefits include any qualified bicycle commuting reimbursement.
Qualified bicycle commuting reimbursement. For any calendar year, the exclusion for qualified bicycle commuting reimbursement includes any employer reimbursement during the 15-month period beginning with the first day of the calendar year for reasonable expenses incurred by the employee during the calendar year.
Reasonable expenses include the purchase of a bicycle and bicycle improvements, repair, and storage. These are considered reasonable expenses as long as the bicycle is regularly used for travel between the employee’s residence and place of employment.
Exclusion from wages. Generally, the value of transportation benefits that you provide to an employee during 2009 are excluded from the employee’s wages up to the following limits.
- For combined commuter highway vehicle transportation and transit passes:
- $120 per month for the months of January and February 2009, and
- $230 per month for any month beginning after February 2009.
- $230 per month for qualified parking.
- For a calendar year, $20 multiplied by the number of qualified bicycle commuting months during that year for qualified bicycle commuting reimbursement.
Qualified bicycle commuting month. For any employee, a qualified bicycle commuting month is any month the employee regularly uses the bicycle for a substantial portion of the travel between the employee’s residence and place of employment and does not receive transportation in a commuter highway vehicle, any transit pass, or qualified parking benefits.
Generally, qualified transportation fringe benefits are excluded from an employee’s wages even if you provide them under a compensation reduction agreement. However, qualified bicycle commuting reimbursements do not qualify for this exclusion if made under a compensation reduction agreement.
Tags: Bicycle Commuting Reimbursement, business tax, business tax preparation, commuter highway vehicle, compensation reduction agreement, employer reimbursement, income tax, income tax preparation, income taxes, qualified bicycle commuting months, qualified bicycle commuting reimbursement, qualified parking benefits, Qualified Transportation Fringe Benefits, Qualified Transportation Fringe Benefits - Bicycle Commuting Reimbursement, small business tax, small business tax preparation, Tax, tax preparation, taxes, transit pass
Posted in Uncategorized | 1 Comment »
Monday, May 3rd, 2010
Small Business Health Care Tax Credit
The Small Business Health Care Tax Credit helps small businesses and small tax-exempt organizations afford the cost of covering their employees.
Eligibility Rules
Providing health care coverage. A qualifying employer must cover at least 50 percent of the cost of health care coverage for some of its workers based on the single rate.
Firm size. A qualifying employer must have less than the equivalent of 25 full-time workers (for example, an employer with fewer than 50 half-time workers may be eligible).
Average annual wage. A qualifying employer must pay average annual wages below $50,000.
Both taxable (for profit) and tax-exempt firms qualify.
Amount of Credit
Maximum Amount. The credit is worth up to 35 percent of a small business’ premium costs in 2010. On Jan. 1, 2014, this rate increases to 50 percent (35 percent for tax-exempt employers).
Phase-out. The credit phases out gradually for firms with average wages between $25,000 and $50,000 and for firms with the equivalent of between 10 and 25 full-time workers.
Small Business Health Care Tax Credit
The Small Business Health Care Tax Credit helps small businesses and small tax-exempt organizations afford the cost of covering their employees.
Eligibility Rules
- Providing health care coverage. A qualifying employer must cover at least 50 percent of the cost of health care coverage for some of its workers based on the single rate.
- Firm size. A qualifying employer must have less than the equivalent of 25 full-time workers (for example, an employer with fewer than 50 half-time workers may be eligible).
- Average annual wage. A qualifying employer must pay average annual wages below $50,000.
- Both taxable (for profit) and tax-exempt firms qualify.
Amount of Credit
- Maximum Amount. The credit is worth up to 35 percent of a small business’ premium costs in 2010. On Jan. 1, 2014, this rate increases to 50 percent (35 percent for tax-exempt employers).
- Phase-out. The credit phases out gradually for firms with average wages between $25,000 and $50,000 and for firms with the equivalent of between 10 and 25 full-time workers.
Tags: business tax, business tax preparation, health care coverage, income tax, income tax preparation, income taxes, Small Business Health Care Tax Credit, small business tax, small business tax planning, small business tax preparation, small tax-exempt organizations, Tax, tax preparation, taxes
Posted in Uncategorized | 2 Comments »
Saturday, March 6th, 2010
Research and Experimental Costs
You can elect to amortize your research and experimental costs, deduct them as current business expenses, or write them off over a 10-year period. If you elect to amortize these costs, deduct them in equal amounts over 60 months or more. The amortization period begins the month you first receive an economic benefit from the costs. For a definition of “research and experimental costs” and information on deducting them as current business expenses, see chapter 7.
Optional write-off method. Rather than amortize these costs or deduct them as a current expense, you have the option of deducting (writing off) research and experimental costs ratably over a 10-year period beginning with the tax year in which you incurred the costs.
Costs you can amortize. You can amortize costs chargeable to a capital account if you meet both the following requirements.
You paid or incurred the costs in your trade or business.
You are not deducting the costs currently.
How to make the election. To elect to amortize research and experimental costs, complete Part VI of Form 4562 and attach it to your income tax return. Generally, you must file the return by the due date (including extensions). However, if you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). Attach Form 4562 to the amended return and write “Filed pursuant to section 301.9100-2” on Form 4562. File the amended return at the same address you filed the original return.
Your election is binding for the year it is made and for all later years unless you obtain approval from the IRS to change to a different method.
Research and Experimental Costs
You can elect to amortize your research and experimental costs, deduct them as current business expenses, or write them off over a 10-year period. If you elect to amortize these costs, deduct them in equal amounts over 60 months or more. The amortization period begins the month you first receive an economic benefit from the costs. For a definition of “research and experimental costs” and information on deducting them as current business expenses, see chapter 7.
Optional write-off method. Rather than amortize these costs or deduct them as a current expense, you have the option of deducting (writing off) research and experimental costs ratably over a 10-year period beginning with the tax year in which you incurred the costs.
Costs you can amortize. You can amortize costs chargeable to a capital account if you meet both the following requirements.
- You paid or incurred the costs in your trade or business.
- You are not deducting the costs currently.
How to make the election. To elect to amortize research and experimental costs, complete Part VI of Form 4562 and attach it to your income tax return. Generally, you must file the return by the due date (including extensions). However, if you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). Attach Form 4562 to the amended return and write “Filed pursuant to section 301.9100-2” on Form 4562. File the amended return at the same address you filed the original return.
Your election is binding for the year it is made and for all later years unless you obtain approval from the IRS to change to a different method.
Tags: amortize, business tax, business tax preparation, business taxes, current business expenses, filing an amended return, income tax, income tax return, income taxes, Optional write-off method, Research and Experimental Costs, Tax, taxes
Posted in Uncategorized | 3 Comments »
Saturday, February 20th, 2010
Starting a Business
When you start a business, treat all eligible costs you incur before you begin operating the business as capital expenditures which are part of your basis in the business. Generally, you recover costs for particular assets through depreciation deductions. However, you generally cannot recover other costs until you sell the business or otherwise go out of business. See Capital Expenses in chapter 1 for a discussion on how to treat these costs if you do not go into business.
For costs paid or incurred after September 8, 2008, you can deduct a limited amount of start-up and organizational costs. The costs that are not deducted currently can be amortized ratably over a 180-month period. The amortization period starts with the month you begin operating your active trade or business. You are not required to attach a statement to make this election. Once made, the election is irrevocable. See Temporary Regulations sections 1.195-1T, 1.248-1T, and 1.709-1T.
For costs paid after October 22, 2004, and before September 9, 2008, you can elect to deduct a limited amount of business start-up and organizational costs in the year your active trade or business begins. Any costs not deducted can be amortized ratably over a 180-month period, beginning with the month you begin business. If the election is made, you must attach any statement required by Regulations sections 1.195-1(b), 1.248-1(c), and 1.709-1(c). However, you can apply the provisions of Temporary Regulations sections 1.195-1T, 1.248-1T, and 1.709-1T to all business start-up and organizational costs paid or incurred after October 22, 2004, provided the period of limitations on assessment has not expired for the year of the election. Otherwise the provisions under Regulations section 1.195-1(b), 1.248-1(c), and 1.709-1(c) will apply.
For costs paid or incurred before October 23, 2004, you can elect to amortize business start-up and organization costs over an amortization period of 60 months or more. See How To Make the Election later.
The cost must qualify as one of the following.
A business start-up cost.
An organizational cost for a corporation.
An organizational cost for a partnership.
Starting a Business
When you start a business, treat all eligible costs you incur before you begin operating the business as capital expenditures which are part of your basis in the business. Generally, you recover costs for particular assets through depreciation deductions. However, you generally cannot recover other costs until you sell the business or otherwise go out of business. See Capital Expenses in chapter 1 for a discussion on how to treat these costs if you do not go into business.
For costs paid or incurred after September 8, 2008, you can deduct a limited amount of start-up and organizational costs. The costs that are not deducted currently can be amortized ratably over a 180-month period. The amortization period starts with the month you begin operating your active trade or business. You are not required to attach a statement to make this election. Once made, the election is irrevocable. See Temporary Regulations sections 1.195-1T, 1.248-1T, and 1.709-1T.
For costs paid after October 22, 2004, and before September 9, 2008, you can elect to deduct a limited amount of business start-up and organizational costs in the year your active trade or business begins. Any costs not deducted can be amortized ratably over a 180-month period, beginning with the month you begin business. If the election is made, you must attach any statement required by Regulations sections 1.195-1(b), 1.248-1(c), and 1.709-1(c). However, you can apply the provisions of Temporary Regulations sections 1.195-1T, 1.248-1T, and 1.709-1T to all business start-up and organizational costs paid or incurred after October 22, 2004, provided the period of limitations on assessment has not expired for the year of the election. Otherwise the provisions under Regulations section 1.195-1(b), 1.248-1(c), and 1.709-1(c) will apply.
For costs paid or incurred before October 23, 2004, you can elect to amortize business start-up and organization costs over an amortization period of 60 months or more. See How To Make the Election later.
The cost must qualify as one of the following.
A business start-up cost.
An organizational cost for a corporation.
An organizational cost for a partnership.
Tags: business tax, business tax preparation, capital expenditures, capital expenses, depreciation deductions, income tax, starting a business, Tax, taxes
Posted in Uncategorized | 2 Comments »
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