Tax Relief Act of 2010: Business and Self-Employed Individuals
If you're an employee, 6.2% of your covered wages up to the taxable
wage base ($106,800 in 2011) is generally withheld for your portion
of the Social Security retirement component of FICA employment tax.
If you're a self-employed individual, you pay 12.4% for the Social
Security portion of your self-employment tax. The Act implements a
one-year 2% reduction in this tax. That means for 2011, you'll pay
the tax at a rate of 4.2% if you're an employee, and 10.4% if you're
self-employed.
If you're a business owner or self-employed individual, you may know
that an additional 50% depreciation deduction has been available for
qualifying property placed in service during 2010. The Act increases
the bonus depreciation percentage allowed to 100% for property
acquired and placed in service after September 8, 2010, and before
January 1, 2012. The Act also extends bonus depreciation at the 50%
level through 2012 (the 50% bonus depreciation will apply for
property placed in service after December 31, 2011, and before
January 1, 2013).
For tax years 2010 and 2011, the Small Business Jobs Act increased
the maximum amount that could be expensed under IRC Section 179 to
$500,000 and increased the phaseout threshold amount to $2 million.
For 2012, the dollar limit amount and phaseout threshold level were
scheduled to drop to $25,000 and $200,000, respectively. This Act
sets the IRC Section 179 expense limit for 2012 at its 2007 level
— $125,000, with a phaseout threshold of $500,000 —
indexed for inflation.
|
Before
Act |
After
Act |
|
"Bonus" depreciation |
50%
additional first-year depreciation allowed for 2010, no
bonus depreciation beginning in 2011 |
100%
bonus depreciation for property acquired and placed in
service after 9/8/10 and before 1/1/12; 50% bonus
depreciation allowed for property acquired and placed in
service after 12/31/11 and before 1/1/13 |
|
IRC Section 179 expensing |
For
2010 and 2011, $500,000 expense limit, reduced by amount by
which cost of qualifying property placed in service during
the year exceeds $2 million; beginning in 2012, limit would
be reduced to $25,000 with $200,000 phaseout threshold |
2010
and 2011 unchanged; for 2012, the limit will be set at
$125,000, reduced by amount by which cost of qualifying
property placed in service during the year exceeds $500,000
($125,000 and $500,000 amounts indexed for inflation) |
|
Tax credit for research and experimentation expenses |
Expired
at the end of 2009 |
Retroactively reinstated for 2010 and extended through 2011
|
|
New markets tax credit |
Expired at the end
of 2009 |
Retroactively
reinstated for 2010 and extended through 2011 |
| Indian
employment tax credit |
Expired at the end of 2009 |
Retroactively reinstated for
2010 and extended through 2011 |
See also:
Summary |
Tax Rates |
Estate Tax |
Gift and Transfer Tax |
Business and SE |
Tax Credits |
Deductions |
Other
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