SmallBizResource Blog -- SmallBizResource

6 Self-Employment Tax Modifications

Posted by Gayle Kesten Tuesday, Feb 3, 2009, 06:30 AM ET

It's closing in on that time -- again. Uncle Sam's annual visit is approaching, and it's never too early to get your paperwork in order, whether you're a do-it-yourselfer or plan to hand it all over to your trusty accountant.

(Just be sure not to hand anything over to scammers, who are tricking taxpayers into coughing up their financial info by means of phony e-mail messages.)

According to the Associated Press, not keeping up with changes in tax laws is a common problem among small business owners (that and poor record-keeping). To help microbusinesses get into the tax mindset -- plus it's my personal preference to toe into the pool rather than jump into the deep end -- the National Association for the Self-Employed (NASE) has issued an overview of a half-dozen tax law changes for 2008 returns. Let's hope they bode well for your bank account.

• First-Time Homebuyer Credit: Offices located inside a first-time home purchase may qualify for additional tax incentives if the purchase was made from April 9, 2008, to June 30, 2009. The $7,500 credit is very similar to a 15-year interest-free loan.

• Standard Mileage Rates Adjusted for 2008: The standard mileage rate for business use of a car, van, pick-up or panel truck is 50.5 cents per mile from Jan. 1, 2008, to June 30, 2008. The rate is 58.5 cents for each mile driven during the remainder of the year.

• Talk to the IRS: The IRS is reaching out to taxpayers who are unable to meet their obligations during this economic slump with tax credits, deductions and additional outreach. Please visit the IRS Web site for more information on how the agency is working to help financially distressed business owners.

• Contribution Limits for IRAs and Other Retirement Plans: Where an IRA contributor who is not covered by a workplace retirement plan is married to someone who is covered, the deduction is phased out if the couple’s income is between $159,000 and $169,000.

• Self-Employment Tax Changes: For those who receive Social Security Retirement or disability benefits, Conservation Reserve Program (CRP) payments are now exempt from the 15.3-percent social security self-employment tax. The income thresholds increase for the 2008 filing season and are indexed for inflation.

• AMT Exemption Increased for 2008: For tax-year 2008 only, the exemption for a married couple filing a joint return is $69,950, up from $66,250 in 2007; $34,975 for a married person filing separately, up from $33,125 and $46,200 for singles and heads of household, up from $44,350.
  

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