Uncle Sam is counting the days until this year’s tax deadline of April 15, 2013. For those of us who are self-employed and have small businesses, we have a lot to manage to ensure we get every possible tax deduction in order to minimize our tax liability. Getting started sooner rather than later helps ensure you get every dollar you deserve.

ATBS, the nation’s largest tax preparer for self-employed tax payors, researches the IRS tax code closely and has put together some helpful updates to make Tax Day a little easier for everyone.

Section 179 and Bonus Depreciation. Good news for small business owners that made capital purchases in 2012! The limit for writing off qualified property has been increased to $500,000 for 2012. Additionally, Bonus Depreciation of up to 50% of capital investments is allowable in 2012. The Section 179 deduction is available for most new and used capital equipment, and also includes certain software. Bonus Depreciation can be taken on new equipment only (no used equipment and no software).

Payroll Tax Holiday Eliminated. This change in tax legislation affects all households that pay either Social Security or Self-Employment Tax because it eliminates the 2% Social Security “tax holiday” that started in 2011 to help stimulate the economy. If you are either a W-2 employee paying FICA or a 1099 Contractor that pays Self-Employment Tax, your Social Security taxes just increased to pre-2011 levels on January 1st. This means you will be paying 2% more tax on your earned income (up to a maximum of $113,700 of earned income).

IRS Delays for the 2012 Tax Season. Using efile is the best way to file an accurate return and direct deposit is the safest and fastest way to get your refund. Please keep in mind many IRS forms are not yet available to the public or preparers, notably Form 4562 (used by small business owners to depreciate capital assets like equipment, trailers, furniture and the like). This means that even though the IRS efile opened January 30, 2013, many returns will not be eligible for filing until the IRS forms are released.

The IRS projects the release date for many of these delayed forms to be sometime in March, 2013. This is important for tax payers to be aware of since there may be delays in getting refunds.

Refund Update. The IRS has a helpful website to track the progress of a current year refund. It is called “Where’s My Refund?” and is available on the IRS website: IRS.gov. Instead of an estimated date for the return, tax payers will receive a personalized refund date. Information will generally be available within 24 hours after the IRS receives the return electronically.

With this website, there will be no need to contact the IRS unless the website instructs a taxpayer to do so. To access the information on “Where’s My Refund?” a taxpayer will need their Social Security number, filing status, and the exact amount of the refund.

Per Diem. The 2012 per diem deduction rate remains the same at 80% of $59.00 per day. There are many deductions available specifically to self-employed tax payers, so it’s critical to speak with an experienced tax preparation company that specializes in your industry.

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Andy Erwin, ATBS Tax Manager

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