New Tax Act can benefit individuals and businesses

Congress passed the Worker, Homeownership, and Business Assistance Act of 2009 on November 5, 2009. The President signed the Act into law on November 6. The Act extended unemployment compensation an extra 14 weeks and includes numerous tax law changes. Here are some of the tax highlights.

Are you looking to buy a home? Even if it isn’t your first you may now be eligible for a tax credit!

The $8,000 home buyer tax credit for first-time buyers is extended through April 2010. The Act also provides for a $6,500 “first-time homebuyer” credit for individuals that have lived in a principal residence for 5 consecutive years out of the last 8 years prior to purchasing a new principal residence. The Act increased the Adjusted Gross Income level of qualifying purchasers to $245,000 for joint return taxpayers ($125,000 for single taxpayers). Finally, the maximum purchase price of a qualifying residence has been increased to $800,000.

Do you own a business? These changes may have a sizeable impact on your company.

The .2% FUTA (Federal Unemployment Tax Act) surtax has been extended into 2011. This surtax was scheduled to expire in 2009.

The extended net operating loss carryback period of 5 years has been expanded to include NOLs of all businesses (not just “small businesses”) from either 2008 or 2009. Losses from “Small Businesses” may use the extended carryback period for both 2008 and 2009. The amount of loss available for the 5th preceding tax year is limited to 50% of the taxable income of that preceding year.

Additionally, the penalties for failure to timely file a partnership or S corporation tax return will be $195 per K-1 beginning with the 2010 tax year.

How do you prepare for these changes?
With Congress taking additional measures to help provide relief, this new legislation may have a significant effect on your business’s operations along with your personal finances. As always, consult with your accountant to organize a customized strategy based on your own unique circumstances to take advantage or help offset these recent changes.

Learn more about the legislation from one of our trusted sources, CCH.