Tax News For Biz Owners Filing Their 2011 Returns
 By Lee S. Shaffer

Before small-business owners hunker down to fill out their 2011 federal tax returns, they need to get knowledgeable about a variety of tax law changes.

Here you'll find a brief overview of some of the most important changes. And you'll see how to make this tax season go a little more smoothly.

But don't take our word for it. Always check with your accountant and financial advisors before filing your tax forms.

1. Business use of your personal vehicle
   If you used your personal vehicle for business purposes, you need to be aware that the standard mileage rate deduction changed in July.
   
   For business miles driven between Jan. 1, 2011, and June 30, 2011, you can deduct 51 cents per mile. For miles driven between July 1, 2011, and Dec. 31, 2011, you can deduct 55.5 cents per mile.
   
   The IRS changed the rate in the middle of the year to reflect the increase in the cost of gasoline.
2. Section 179 deduction
   The maximum allowable deduction under Section 179 is $500,000. This is the same as 2010, when the Small Business Jobs Act of 2010 increased the maximum amount from $250,000. The limit for the phase out of the deduction is $2 million.
3. Payroll tax cut for 2011
   Starting Jan. 1, 2011, the employee's part of the Old-Age, Survivors, and Disability Insurance (OASDI) Social Security tax was decreased from 6.2 percent to 4.2 percent on the first $106,800 paid to each employee.
   
   The OASDI portion of self-employment tax was decreased for the business owner, too, from 12.4 percent to 10.4 percent.
   
   That's a significant savings for everyone on their 2011 tax bill.
4. Health insurance deduction for the self-employed
   Small-business owners lost some ground on this deduction for 2011.
   
   In 2011, the premiums small-business owners paid for health insurance will still be deductible on Form 1040. But, the premiums won't be deductible on Schedule SE, Self-Employment Tax.
   
   The result? Your self-employment earnings will be higher, and so will the self-employment tax you owe. For small-business owners, this change is essentially a 13.3-percent tax increase over 2010.
5. Four Ways To Get IRS Forms And Publications
   Last tax season, the IRS discontinued the automatic mailing of paper tax packages. That means you'll need to get the forms for yourself. Here are four ways.
   1. Online
      You can access forms and publications on the IRS website.
   2. Face to face
      There are 401 Taxpayer Assistance Centers nationwide where the IRS offers one-on-one assistance to taxpayers. You can also pick up many tax forms and publications.
   3. Community locations
      During tax filing season, many libraries offer free tax forms to taxpayers. Some libraries also have copies of commonly requested publications. Many large grocery stores, copy centers and office supply stores have forms you can photocopy or print from a CD.
   4. By mail
      You can call 800-TAX-FORM (800-829-3676) to order current year forms, instructions and publications by mail. You'll usually receive your order within 10 days.

AFS Can Help, Too
Completing your own tax forms can be a headache. That's when you need accurate, straightforward answers to your questions.

The online certified public accountants at AFS ProTax are ready to help. AFS Members enjoy unlimited access to the ProTax professionals. They're only a keystroke away, and there's no cost to you. ProTax is included with your AFS Membership



(Posted January 2012)

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