Fiscal Cliff Tax Deal: What Does it Mean for Small Business? —Forbes

There’s good news and bad news.  Here’s the low-down.  

Dean Zerbe offers his take at Forbes on how the current deal will affect small-business owners:

For small and medium business owners there is good news and bad news from the deal on the fiscal cliff.  In addition, the deal strongly underscores the need for business owners to sharpen their own pencils to cut their taxes.  NOTE – this article is written after the Senate vote on the Fiscal Cliff deal but before the House has taken any action – will update if there any substantive tax changes. 

First, let’s start with the good news.  Greater certainty in taxes — (although as you will read below, you may not like what is certain).  More than any other issue I hear about from business owners and their accountants is the need for certainty in taxes.  A recent study by the Mercatus Center highlights the economic drag of uncertainty in taxes.

The tax deal makes permanent a number of tax provisions (after making changes from current 2012 policy), including the tax rates on ordinary income; estate tax; dividends and capital gains – and best of all, the alternative minimum tax (AMT).  NOTE:  The payroll tax holiday was ended.   On AMT the current exemption of $33,750 individual and $45,000 married is increased to $50,600 single and $78,750 married and indexes the exemption and phaseout amounts.  KEY – this new AMT fix is for tax years beginning after December 31, 2011 – ie the 2012 tax year.  Happy day.

Zerbe then weighs in with some detail on the effects of the current status quo on:

 

• BUSINESS PROVISIONS EXTENDED
• ORDINARY INCOME: 
• CAPITAL GAINS/DIVIDENDS
• ESTATE TAX
• HIDDEN TAX INCREASES —  PHASE OUTS
• PLANNING OPPORTUNITIES FOR BUSINESS

Read the whole piece here.

 

For Small Business Owners, the Current Fiscal Cliff Deal Offers Good News and Bad News

 

see also:

• Are You Ready for the Fiscal Cliff?  Eight Must-Reads  —Forbes
• How Fiscal Cliff Talks Hit the Wall  —Wall Street Journal
• Senate Approves Post-Midnight Fiscal Cliff Deal, Shifting Pressure to Boehner  —Accounting Today
• IRS Changes Income Tax Withholding Tables for 2013 to Reflect Expired Tax Cuts  —Accounting Today
• Fiscal Cliff Focus Moves to House  —Wall Street Journal