Congress passes the Small Business Tax Act of 2010 on September 23, 2010 - President Obama Signs it on 9-27-2010

Key benefits are as follows:

Small Business Jobs bill (H.R. 5297) to cut taxes for millions of small businesses and provide them with access to credit that will help spur growth and job creation.

The Small Business Jobs Act will:

1. Cell Phones: The bill removes onerous record-keeping requirements that complicate the ability to deduct the costs of cell phone use as a regular business expense. It also allows self-employed individuals to deduct health insurance costs in paying the self-employment tax in 2010.

2. Eliminate all capital gains taxes on small business investments during 2010 – helping 1 million small businesses.

3. Increase the amount of investments that small business can write off – helping 4.5 million small businesses.

4. Allow the self-employed to deduct health insurance costs – helping 2 million people; Reduce the expense for entrepreneurs to start a business. This is a huge tax savings for self employed's. For example a $10,000 medical insurance deduction now saves the self employed an extra $1,500 in taxes. Never before were Schedule C (Self Employed's) able to get this type of deduction.

5. Limit the penalties for reporting errors that affect small businesses.

6. The bill creates a $30 billion Small Business Lending Fund to provide community banks with capital to increase small business lending. The fund is limited to the smallest banks, those holding $10 billion or less in assets, with key performance-based standards to incentivize those lenders that extend new credit to small businesses (decreasing the dividend rate banks pay as they increase small business lending).

7. It also invests $1.5 billion in grants to support $15 billion in new small business lending through already successful state programs.

8. The bill expands access to and lowers costs for small business to access Small Business Administration loans and increases SBA loan limits.

9. The bill doubles small business expensing to $500,000, phasing out at $2 million, for immediate write offs of capital investments, such as equipment and machinery, in 2010 and 2011. It also expands purchases qualifying for expensing to include certain types of real property, such as leasehold, retail and restaurant improvements.

10. For 2010 and 2011, there is a more favorable depreciation provision under Section 179. This section of the code that allows businesses to deduct up front the cost of their capitalizable property. It doesn’t have to be depreciated over five, seven, 10 years.”

11. In addition, the bill extends bonus depreciation, allowing businesses to immediately write off 50 percent of the cost of new equipment investments in 2010 to spur investment and growth.

12. The bill doubles to $10,000 the tax deduction for start-up expenditures for entrepreneurs looking to launch a new venture. It creates a variety of new tools to help small businesses gain international market access and export goods (at the U.S. Trade Representative, SBA, and Commerce), including a new State Export Promotion Grant Program (STEP), which will leverage more than $1 billion in exports.

THE REVENUE RAISER........ READ CAREFULLY

LANDLORDS will now have to issue 1099's to all service providers for payments of $600 or more during year the for rental property expenses. Effective for all payments made starting Jan 1, 2011.

Ouch, that's a lot of paperwork and increased burden on landlords. They now have to obtain a signed form W-9 (request for taxpayer ID) and then issue 1099's to the vendors or repairmen and a copy to the IRS.

Download our Tax Brief and read more

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