Critical Year-end Tax Planning Advice for Small Business Owners

An unprecedented number of tax law changes are on the horizon, and as we near the end of the year, that poses a number of tax-planning challenges for business owners. Moreover, because we are in an election year, we can’t easily predict which if any of these changes will actually take place in 2013.

The resulting uncertainty requires tax practitioners to help their clients prepare alternative plans that facilitate different strategies, depending on which laws are enacted. Once we get closer to the end of the year and the landscape begins to settle, we will be in a better position to advise on the best strategy to implement.

Congress still must decide which tax provisions will expire and which new ones will take effect. But for now, these are some of the scheduled changes looming in 2013:

Expiring provisions related to individuals: Individual income tax rates will increase to a maximum of 39.6 percent, long-term capital gains rates will increase to 20 percent, and the qualified dividend rate will cease to be taxed at 15 percent and will instead be subject to the maximum ordinary income tax rate of 39.6 percent.

Expiring provisions related to businesses: Section 179 expense will decrease to $25,000 and the 50 percent percent bonus depreciation provision will expire.

Continue reading this tax planning advice article at Washington Post.