Whether you file as a corporation or sole proprietor here’s what business owners need to know about tax changes for 2015.
Standard Mileage Rates
The standard mileage rates in 2015 are as follows: 57.5 cents per business mile driven, 23 cents per mile driven for medical or moving purposes, and 14 cents per mile driven in service of charitable organizations.
Health Care Tax Credit for Small Businesses
Small business employers who pay at least half the premiums for single health insurance coverage for their employees may be eligible for the Small Business Health Care Tax Credit as long as they employ fewer than the equivalent of 25 full-time workers and average annual wages do not exceed $51,600 (adjusted for inflation).
In 2015 (as in 2014), the tax credit is worth up to 50 percent of your contribution toward employees’ premium costs (up to 35 percent for tax-exempt employers). For tax years 2010 through 2013, the maximum credit was 35 percent for small business employers and 25 percent for small tax-exempt employers such as charities.
UPDATE—Section 179 Expensing–UPDATE
An extension for increased limitations for Section 179 expensing along with an extension of the bonus depreciation was included in HR 5771,Tax Increase Prevention Act of 2014, which was signed into law last year, on December 31, 2014 but expired at the end of 2014 and has not been extended.
As such, in 2015 the maximum Section 179 expense deduction for equipment purchases is $25,000 of the first $200,000 of certain business property placed in service during the year and the bonus depreciation of 50 percent for qualified property that exceeds the threshold amount is no longer available. Please call us if you have any questions about Section 179 expensing and the bonus depreciation.
UPDATE—Work Opportunity Tax Credit (WOTC)–UPDATE
An extension for the WOTC was included in HR 5771, Tax Increase Prevention Act of 2014, but expired at the end of 2014 and has not been extended.
As such, the WOTC was extended through 2014 (retroactive to January 1) and included the enhanced credit for hiring certain veterans. When a business hires a person from one of several specific economically disadvantaged groups it may claim a Work Opportunity Tax Credit, generally equal to 40 percent of the first $6,000 in wages paid to a new hire. Please call us if you have any questions about the Work Opportunity Tax Credit.
SIMPLE IRA Plan Contributions
Contribution limits for SIMPLE IRA plans increased to $12,500 for persons under age 50 and $15,500 for persons age 50 or older in 2015. The maximum compensation used to determine contributions increases to $265,000.
Please contact the office if you need help understanding which deductions and tax credits you are entitled to.