Three Key Tax Bills to Watch

There are a number of bills before Congress that will affect small business taxes. The first is the Small Business CHOICE Act of 2009 (H.R. 850), which would allow licensed small business health insurance cooperatives to obtain health insurance at lower prices, and would create a tax credit for payments of employee or family coverage. The Small Business CHOICE Act would be restricted to fully funded small business health insurance cooperatives, meaning the cooperative group forms a chartered insurance company with at least 100 members. The cooperative must also be small business–owned, (govtrack.us/congress/billtext.xpd?bill=h111-850).

A second bill before Congress affecting small business is the Home Office Deduction Simplification Act of 2009 (H.R. 1509). The home office act would allow home-based business owners to claim office expenses of $1,500 as a standard deduction, provided the deduction does not exceed the gross income of the business itself. The current home office deduction is claimed by adding up all expenses for your home, such as utilities, mortgage interest, insurance, lease or rent payments, or real estate taxes, as applicable.
The percentage of the home that the business uses is then applied to the total. For example, if your office constitutes ten percent of your home, ten percent of your expenses are deductible. Also, any direct costs, like painting a home office, may added to the total. Barbara Weltman, small business tax expert and NY Report contributing editor, says the new tax amendment “would save home-based business owners considerable recordkeeping and tax preparation time.”

A third bill of interest in the business community is the cap and trade, a measure that deals with carbon credits and business energy use. Carbon credits are allotted based on the amount of greenhouse gas that companies and individuals are allowed to emit. The government would implement carbon credits to buy and sell. When a business or individual uses fewer than the government-allotted carbon credits, they can sell their leftovers to those who are not able to scale down emissions.
The price of carbon credits will be determined by the fluctuating marketplace, and essentially this process acts as a tax on energy usage. “Under cap and trade, many predict that the cost of energy will rise—businesses could pass the additional cost on to consumers,” says Weltman. She adds, “For individuals, their energy costs would rise, leaving them less spendable income. Result: reduced sales for businesses.”

The Small Business CHOICE Act and the Home Office Deduction Simplification Act have both been referred to Congressional committees for further refinement, and cap and trade is projected to hit the Congressional floor early this month. For more information on these bills, and more, visit govtrack.us.