As the new year begins, retailers are taking a close look at their year end review and preparing for the upcoming tax season. Taxes remain an important topic on the federal level as they directly affect the national deficit, job creation and the economy. And while tax planning changes with each presidential election, retailers and other small business owners can be assured of a few things this upcoming tax season.
Taxing Rules, Regulations and Conditions for the 2012 Tax Season
First, favorable business tax rules may be extended.?While numerous tax rules are set to expire at the end of 2011, they will more than likely be extended, at least through 2012. However, action on extension may not occur until 2012 (i.e., extension will be retroactive to the start of the year). Some of the key provisions include:
1) 100 percent bonus depreciation and up to $500,000 of first-year expensing (the Section 179 deduction).
2) 100 percent exclusion for gain from the sale of qualified small business stock (stock in certain C corporations held more than five years).
3) Research credit.
4) Work opportunity credit for hiring individuals from certain targeted groups (only certain veteran groups are set to apply after 2011).
Other less favorable conditions to expect are unemployment taxes and an increase in tax audits.? Some states borrowed from the federal government to pay for unemployment benefits, but not having repaid the borrowed sums in full has resulted in an unemployment tax for employers in these states. These employers cannot use the full credit state unemployment taxes when figuring their FUTA liability. As for tax audits of businesses, according to one KPMG survey, they are on the rise. Corporate executives who were surveyed reported a 61 percent increase in federal tax disputes; 37 percent reported an increase in state tax audits.
And when it comes time to file, small businesses will not only be following new rules and regulations, but also new filing systems. In fact, filings will be almost exclusively online.? Starting with the 2012 tax season, paid tax return preparers are required to e-file client returns if they expect to file more than 10 forms in the 1040 series and/or 1041 (the income tax form for trusts and estates). E-filing isn’t limited to personal income tax returns.
This piece has been adapted from an article by Small Business Trends, where you can learn more expected trends for the 2012 tax season.