The Small Business Jobs Act, which was signed into law by President Barack Obama in September, contains $12 billion in tax breaks for businesses. There are no direct incentives for hiring – the thinking is that stimulating capital investments and certain other actions by businesses will help to create new jobs.
Whether or not this model works remains to be seen, but you may be able to benefit from one or more of these tax breaks, if you understand what they are and act in time. So which tax breaks are right for your company? Here are five things you need to know.
If you are self-employed and pay own health insurance premiums, you will have a lower tax bill this year.
While the payment of premiums for your staff is a business deduction, your own premiums are a personal deduction (they reduce your gross income and you don't have to itemize deductions to write off the premiums).
What's new for 2010 only is that your premiums reduce your net earnings from self-employment for purposes of the self-employment tax (covering your Social Security and Medicare taxes for the year), which can save you considerable dollars. For instance, if you pay premiums of $10,000 in 2010, you'll save about $1,500 in self-employment tax.
In effect, the tax savings reduces your out-of-pocket costs for the premiums to about $8,500.
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