Tax laws are so complex and change so frequently that it can be easy for some provisions that could save you money to slip through the cracks when you file taxes for your business. Here’s a roundup of tax tips that are good to know for the 2014 tax year:|
Small businesses health care tax credit — The maximum rate for the tax credit, which is available to eligible businesses with low- to moderate-income employees, rises to 50 percent in 2014 (35 percent for tax-exempt organizations). This amount is up from 35 percent and 25 percent, respectively, in 2013. To be eligible for the credit, you must cover at least 50 percent of the cost of single (not family) health care coverage for each of your employees. Certain other requirements apply; see “What You Need to Know about the Small Business Health Care Tax Credit” at irs.gov.
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Health insurance deduction for self-employed people — Many business owners qualify for this deduction. Premiums paid for medical, dental and qualified long-term care insurance covering the taxpayer, spouse and dependents are generally eligible for this deduction. Premiums paid for coverage of an adult child under age 27 also qualify, even if the child is not the taxpayer’s dependent. Certain rules apply; see IRS Publication 535 at www.irs.gov. Bonus: You don’t have to itemize deductions on Schedule A to take this deduction.
Simplified home office deduction — If you have a home-based business, a far simpler alternative for figuring the deduction for business use of a home has been available since 2013. In contrast to
the traditional method, which involves a 43-line form with complex calculations, the recently available alternative requires filling out only a short worksheet. The new optional deduction is capped at $1,500 per year based on $5 per square foot for up to 300 square feet. See IRS Publication 587 at irs.gov for details.
Refund of payroll taxes on benefits for same-sex spouses — If you provided health coverage for an employee’s same-sex spouse in previous tax years and included the value of that coverage in the employee’s gross income, you may have overpaid Social Security and Medicare taxes on those benefits. If the period of limitations for filing a claim for refund is open, you may claim a refund of, or make an adjustment for, any overpayment of Social Security taxes and Medicare taxes. The same applies if you sponsored a cafeteria plan that allowed employees to pay premiums for health coverage on a pretax basis. See the instructions for IRS Form 941-X at irs.gov.
If you’re due a refund, remember that direct deposit is the fastest, most secure way to receive it. Just provide the routing and account numbers for your business account at American River Bank.
Questions about Direct Deposit? Contact a Business Banker at (800) 544-0545.