New Tax Rules For 2009
 By Alex R. Merriman

New tax laws could save your small business big bucks in the coming year. Check out these changes. But, be sure to talk to your tax professional before making tax decisions for your small business.

2009 Standard Mileage Rates
The Internal Revenue Service has issued the 2009 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business.

Beginning on Jan. 1, 2009, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

• 55 cents per mile for business miles driven
• 24 cents per mile driven for medical or moving purposes
• 14 cents per mile driven in service of charitable organizations

A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be applied to any vehicle used for hire or for more than four vehicles used simultaneously.

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

The mileage rates for 2009 reflect generally higher transportation costs compared to a year ago, but the rates also factor in the recent reversal of rising gasoline prices. While gasoline is a significant factor in the mileage rate, other fixed and variable costs, such as depreciation, enter the calculation.

Bicycle Bailout
The $700 billion bailout of 2008 gave a little relief to companies that want to reward employees who ride their bicycles to work. Beginning Jan. 1, 2009, businesses can give bike-riding commuters a $20 per month tax-free reimbursement. The reimbursement is designed to defray the costs of operating a bike. Employers can deduct the reimbursement expense from their federal taxes.

Unemployment Tax Increase
The FUTA (Federal Unemployment Tax Act) tax rate had been scheduled to drop to 6 percent after 2008. But under the new law it will remain at 6.2 percent through 2009 and will drop to 6 percent for 2010.

Tax Breaks For Businesses In Disaster Areas
There’s a new set of tax relief provisions for businesses hit by events such as wildfires, hurricanes and floods. The provisions apply to businesses anywhere in the U.S. that are declared to be federal disasters after 2007 and before 2010.

The provisions include relief such as:

• Ability to expense cleanup and repair
• A 50-percent first-year bonus depreciation allowance applies to most types of machinery and equipment bought to rehabilitate or replace damaged property

A number of conditions must be met, and certain types of property are excluded. For a state-by-state listing of disaster declarations, go to www.fema.gov.

Tax Help Available
Prepare to take advantage of all the new tax laws this year by getting help from the certified public accountants at AFS ProTax. AFS Members can get answers to all of their tax questions from CPAs who understand small business.

Just click ProTax. You can ask your questions online and receive a confidential reply.

The CPAs at ProTax can answer questions about:

• Paying unemployment taxes
• Record keeping for vehicle tax deductions
• Special tax breaks that might be available for your specific type of small business
• And much more

(Posted January 2009)

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