The Top Income Tax Changes for Small Businesses and Self-Employed

With a month until the April 15 deadline when millions of Americans and small businesses must file their 2014 tax returns, the National Association for the Self-Employed (NASE), an advocate and resource for the self-employed and micro-businesses, has released a list of changes and updates to the tax code along with important tips and resources for filing accurate returns.

“The number one thing individuals and small businesses across the country can do now to prepare for tax season is educate themselves about the changes and new adjustments to the tax code,” said Keith Hall, President and CEO of NASE. “From a new health care penalty to updates in the mileage reimbursement rate and investment contributions, there are several changes to the tax code that will impact this year’s return. You can never be too prepared and now is the time to start gathering your documents.”

2014 TAX CHANGES AND ADJUSTMENTS

The new Affordable Care Act (ACA) penalty for non-compliance
Potential individual exceptions to the ACA penalty
A streamlined, standard home office deduction available
The standard mileage rate for business use of an automobile has changed to 56 cents per mile (57.5 cents for 2015)
Limits for retirement plan contributions such as IRAs and 401(k) plans have increased
The loss of the applicability of Health Reimbursement Accounts (HRAs)

“As Congress considers tax reform this year, it is important that the small business community be included in any overhaul of the tax system. To ensure fairness, sole proprietors and small employers on Main Street should also be part of any comprehensive tax reform just like their corporate counterparts on Wall Street,” concluded Hall.

Small employers across the nation are part of the largest small business demographic of 27 million self-employed and micro-businesses, according to newly released 2012 U.S. Census statistics. This is an increase of 80,822 self-employed (55,165) and micro-businesses (25,657) nationally over 2011. In fact, 2012 represents a peak year for the self-employed with an average growth rate of 2.86 percent over the last 10 years (more than any other small business demographic).

*latest information available from 2012 provided by the U.S. Census Bureau Statistics on Nonemployer and U.S. Small Businesses

TIPS FOR FILING

You are not alone: use many of the countless NASE resources available to help you through your preparation, in addition the SBA and local Small Business Development centers are standing by to help
Get details straight from the source: bookmark the IRS website in order to get the details you need
Look for hidden deductions: many people overlook deductions that could save thousands of dollars
File Electronically to avoid math errors
Avoid shortcuts
If you just can’t get it done, you can ask for more time

The NASE advocates for fairness and simplification in the nation’s tax code. Not only should adjustments be made to the corporate tax rate, but also the individual rate – the rate at which the majority of the self-employed and small employers’ taxes are calculated.

The NASE is also a leading supporter of the Small Business Healthcare Relief Act, which would allow for the continued utilization of standalone health reimbursement arrangements (HRAs) for small employers (49 or less employees). These HRA arrangements have currently been disqualified under the new regulations outlined in the Affordable Care Act – a major change for the small business community this year. The Administration has recently delayed the implementation of this regulation for the short-term, but a long-term bipartisan solution is needed to address this issue.

Small Business