Tax Law Changes Affects on Small Business and Individuals
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For information about the Sales Tax referendum recently passed by Milwaukee county voters click here.
For information about the Paid Sick Days ordinance recently passed by City of Milwaukee voters click here.
UPDATE:
Taxpayers Affected by Floods Receive Filing Relief
 | 2 new counties, Manitowoc and Monroe, have been declared presidential disaster areas, for a total of 30 counties in Wisconsin. |
| The August 13th date has been further postponed until August 31st. Additionally returns due June 15th, 2008 can be postponed until August 31st as well. |
| If a person living in the designated counties incurs losses that will not be covered by insurance will be allowed an opportunity to amend their 2007 tax return, claim the loss and potentially receive a refund sooner. |
If you believe you may benefit from the amended return, please contact us.
Taxpayers Affected by Floods Receive Filing Relief
Currently 30 counties have been declared presidential disaster areas and are eligible for some form of state and federal tax relief. The declared counties are as follows:
Adams Calumet Columbia Crawford
Dane Dodge Fond du Lac Grant
Green Green Lake Iowa Jefferson
Juneau Kenosha La Crosse Manitowoc
Marquette Milwaukee Monroe Ozaukee
Racine Rock Richland Sauk
Sheboygan Vernon Walworth Washington
Waukesha Winnebago
Affected taxpayers includes those who live, and businesses whose principal place of business is located in the covered disaster area, taxpayers whose books and records or whose tax professional’s offices are located in the covered disaster area, and relief workers affiliated with a recognized government or philanthropic organization assisting with relief activities in the covered disaster areas.
The relief involves taxes or returns due after June 4, 2008 and before August 13, 2008, and will allow an additional time to file income tax returns and make estimated tax payments until August 13, 2008. For sales and use tax, withholding, and excise tax returns, reports, and payments, affected taxpayers can request a 30-day extension.
Please see the following links for additional information.
From Wisconsin Department of Revenue: http://www.revenue.wi.gov/news/080616.html
From the Internal Revenue Service: http://www.irs.gov/newsroom/article/0,,id=184000,00.html
IRS Increases Standard Mileage Rate
The IRS has increased the standard mileage rate beginning July 1, 2008. The rate will increase 8 cents to 58.5 cents per mile for all business miles driven during the second half of 2008. The rate for computing deductible medical and moving expenses have also increased 8 cents to 27 cents a mile for the second half of the year. The charitable mileage rate will remain at 14 cents a mile. That rate is set by statute, and is not subject to change by the IRS.
Normally rates are adjusted once a year, but with rising gas prices, the IRS adjusted the rates again to better reflect the real cost of operating a vehicle.
The Small Business and Work Opportunity Tax Act was signed into law on May 25, 2007.
Some of the highlights of the bill include:
Extend and enhance
An extension and widening of the work opportunity credit: The work opportunity tax credit is available for employers hiring individuals for targeted groups, which now will include disabled veterans and workers in rural renewal countries. The amount of the credit is calculated based upon the amount of qualified wages paid to the employer. The 2007 act extends the credit through September 1, 2011, and widens the targeted groups to include disabled veterans and workers in rural renewal counties.
Enhancement of the tip credit for certain small businesses: Employers who provide food and beverages to customers are eligible for a tax credit for FICA taxes paid on employees’ combined wages and tips in excess of the federal minimum wage. The 2007 act freezes the minimum wage amount for purposes of calculating the tip credit, thereby allowing restaurants to continue claiming the full tip credit despite an increase in the federal minimum wage.
Waiving the AMT limitation for individuals and corporation claiming the work opportunity and tip credit: Before the new tax law was passed, theses credits were unable to offset the alternative minimum tax. Now that limitation is permanently waived for both individuals and corporations.
Raising the “kiddie tax” age from under 18 to under 19 or under 24 (if a full time student): For 2006 and 2007, the “kiddie tax” applies to a child who has not reached the age of 18 by the end of the year and whose unearned income (interest, dividends, and capital gains) exceed $1,700. The “kiddie tax” applies regardless of whether the child may be claimed as a dependent by either or both parents. For the amount of unearned income that exceeds the $1,700, it is taxed at the parent’s tax rates if the rates are higher than the child’s tax rate. Beginning in 2008, the new law generally expands the “kiddie tax” to apply to children who are 18 years old or who are full-time students under the age of 24.
Also included are some reforms to the S Corporation rules, increases to Katrina recovery tax incentives, and an increase in the penalty for writing bad checks to the IRS.
This is only a very brief summary of the new tax law. If you have any questions on how these changes will affect you or your business, please give us a call.
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