Prior to preparation of the 2008 tax forms, micro-business and the self-employed should be aware of a few tax law changes, including an increase in retirement savings opportunities and self-employment tax modifications.
"Don't let the 2008 filing season sneak up on you," said Keith Hall, national tax advisor for the National Association for the Self-Employed (NASE). "There are many online resources available to micro-businesses to help them get prepared, including the NASE and the Internal Revenue Service."
The following tax law changes relate to 2008 returns:
First-Time Homebuyer Credit -- Offices located inside a first-time home purchase may qualify for additional tax incentives if the purchase was made from April 9, 2008, to June 30, 2009. The $7,500 credit is very similar to a 15-year interest-free loan.
Standard Mileage Rates Adjusted for 2008 -- The standard mileage rate for business use of a car, van, pick-up or panel truck is 50.5 cents per mile from Jan. 1, 2008, to June 30, 2008. The rate is 58.5 cents for each mile driven during the remainder of the year.
Talk to the IRS -- The IRS is reaching out to taxpayers who are unable to meet their obligations during this economic slump with tax credits, deductions and additional outreach. Please visit http://www.irs.gov/ for more information on how the agency is working to help financially distressed business owners.
Contribution Limits for IRAs and Other Retirement Plans -- Where an IRA contributor who is not covered by a workplace retirement plan is married to someone who is covered, the deduction is phased out if the couple's income is between $159,000 and $169,000.
Self-Employment Tax Changes -- For those who receive Social Security Retirement or disability benefits, Conservation Reserve Program (CRP) payments are now exempt from the 15.3-percent social security self-employment tax. The income thresholds increase for the 2008 filing season and are indexed for inflation.
AMT Exemption Increased for 2008 -- For tax-year 2008 only, the exemption for a married couple filing a joint return is $69,950, up from $66,250 in 2007; $34,975 for a married person filing separately, up from $33,125 and $46,200 for singles and heads of household, up from $44,350.
Entrepreneurs preparing to meet the filing deadline can turn to Hall and other qualified CPAs for help through NASE's TaxTalk program at http://taxtalk.nase.org/taxtalk.asp. While there, they can submit a tax question, watch or download tax advice from Keith Hall and browse the TaxTalk resource library.
Find out more information about these and other tax law changes for the 2008 tax season check the instructions on the 1040 form or http://www.irs.gov/.