Since not many bills are being passed these days in Washington, we are still waiting for any tax legislation that may be extended or changed. The business section 179 deduction has decreased significantly from 2013 to 2014. Without any change this could potentially cause small business to owe more tax. We’ll wait to see if Congress acts. Last time they waited until after the end of the year to retroactively “fix” this deduction.
Small businesses are also having issues related to providing health insurance to employees pre-tax who are covered by individual policies. There are large fines for doing this. A group plan is an option. Small businesses with more than one employee won’t be able to reimburse health insurance expenses pre-tax any longer, unfortunately. This increases both the taxes and payroll taxes for the employee and the payroll taxes for the employer.
The major changes that we will see on the individual side this year are the new regulations taking affect related to Obamacare. We expect new forms and several new questions to answer on your tax return this year. Be prepared to provide that information to us. Penalties do kick in this year for those who do not have minimum essential coverage defined by the law or meet certain criteria to be exempt.
On the local side, business income continues to not be taxable in Kansas as it was in 2012. Itemized deductions will continue to be limited in Kansas for certain items. The state also recently passed legislation to reduce some businesses’ unemployment rates. Be sure you are using the correct rate. Watch for the upcoming election cycle as many municipalities and counties are sure to have sales tax changes voted on.