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Listen in! Pick up some expert advice to a reader's question that we selected from CyberSchmooz.

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Featured Biz Question

Are there any new tax laws or rulings that apply for this year that might help me out come tax time?

Answer from our Guest Expert Peter Soh of AdviseInc.com

New Year Tax Info

Hi, there,

Yes! There are some new tax rules for 2001 that can help you with your small business and personal income taxes. Take a look and see if any of the scenarios apply to you. If you have any questions, contact your accountant for more details.

Take Advantage of Electing S Corp Status; Individual Tax Rates Are Declining.

Individual tax rates will decrease by .5% over all the brackets (except for the 10% bracket) for 2001 and for 2002-2003. From 2004-2010, the rates will decrease by 1% for each of the brackets with a 2.6% drop in the top bracket in 2006. A rebate was given to all taxpayers for 2001 since it was a retroactive application. Also a 10% bracket will be added for lower income taxpayers that will be effective in 2002.

Individual Rate Reductions

Year

 

Rates

     

2000 (prior)
2001 Rebate
2002-2003
2004-2005
2006-2010



10%
10%
10%

15%
15%
15%
15%
15%

28%
27.5%
27%
26%
25%

31%
30.5%
30%
29%
28%

36%
35.5%
35%
34%
33%

39.6%
39.1%
38.6%
37.6%
35%

For more on the tax advantages of electing S corporation status, read Idea Cafe's S Corporation Explained Article.

Establish a Child Care Facility and Get Tax Breaks.

If you're an employer and provide child care facilities, learn more about the Employer-Provided Child Care Facilities Act. You can claim a percent of qualified expenditures for employee child care and 10 percent of qualified expenditures for child care resource and referral services. The Act provides a credit for employers. This provision is effective in 2002. See your accountant for more details. continued

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About the Expert

Peter C. Soh
Owner of AdviseInc.com
Peter is a savvy certified public accountant dedicated to helping startups. He is a small business advisor for the U.S. Small Business Administration and teaches "How to Start Your Business" seminars. more