Table of Contents
The purpose of this publication is to provide general information about the federal tax laws that apply to small business owners who are sole proprietors and to statutory employees. This publication has information on business income, expenses and tax credits that may help you file your income tax return.
IF you need information about: | THEN you should see: |
Corporations | Publication 542 |
Farming | Publication 225 |
Fishermen (Capital Construction Fund) | Publication 595 |
Partnerships | Publication 541 |
Passive activities | Publication 925 |
Recordkeeping | Publication 583 |
Rental | Publication 527 |
S corporations | Instructions for Form 1120S |
Table A. What You Need To Know About Federal Taxes
(Note. The following is a list of questions you may need to answer so you can fill out your federal income tax return. Chapters are given to help you find the related discussion in this publication.)
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What must I know | Where to find the answer | |
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What kinds of federal taxes do I have to pay? How do I pay them? | See chapter 1 (page 6). | |
What forms must I file? | See chapter 1 (page 10). | |
What must I do if I have employees? | See Employment Taxes in chapter 1 (page 9). | |
Do I have to start my tax year in January? Or can I start it in any other month? | See Accounting Periods in chapter 2 (page 12). | |
What method can I use to account for my income and expenses? | See Accounting Methods in chapter 2 (page 12). | |
What kinds of business income do I have to report on my tax return? | See chapter 5 (page 20). | |
What kinds of business expenses can I deduct on my tax return? | See Business Expenses in chapter 8 (page 31). | |
What kinds of expenses are not deductible as business expenses? | See Expenses You Cannot Deduct in chapter 8 (page 40). | |
What happens if I have a business loss? Can I deduct it? | See chapter 9 (page 40). | |
What must I do if I disposed of business property during the year? | See chapter 3 (page 16). | |
What are my rights as a taxpayer? | See chapter 11 (page 45). | |
Where do I go if I need help with federal tax matters? | See chapter 12 (page 47). |
Internal Revenue Service
Business Forms and Publications Branch
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Washington, DC 20224
Internal Revenue Service
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The following are some of the tax changes for 2008. For information on other changes, go to www.irs.gov, and click on More Forms and Publications. Then, click on What's Hot in forms and publications, or see Publication 553.
Self-employment tax. The maximum net self-employment earnings subject to the social security part of the self-employment tax increases to $102,000 for 2008.
Optional method to figure net earnings. For tax years beginning after 2007, the amount of gross and net income from self-employment you may have when using the nonfarm optional method or the farm optional method to figure your self-employment tax has increased. This allows electing taxpayers to secure up to four credits of social security benefits coverage. In future years, the threshold will be increased to maintain that level of coverage. See chapter 10.
Increased section 179 deduction dollar limit. For tax years beginning in 2008, the maximum section 179 expense deduction is generally increased from $125,000 to $250,000 (higher limits apply to certain property). For more information, see Depreciation in chapter 8.
Standard mileage rate. For 2008, the standard mileage rate for the cost of operating your car, van, pickup, or panel truck for business miles is:
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50.5 cents per mile for the period January 1 through June 30, and
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58.5 cents per mile for the period July 1 through December 31.
For more information, see Car and Truck Expenses in chapter 8.
Additional tax relief for businesses affected by the Kansas storms and tornadoes. Special rules not covered in this publication may apply. For more information, see Publication 4492-A, Information for Taxpayers Affected by the May 4, 2007, Kansas Storms and Tornadoes.
Additional tax relief for affected businesses in the Midwestern disaster areas. Special rules not covered in this publication may apply. For more information, see Publication 4492-B, Information for Affected Taxpayers in the Midwestern Disaster Areas.
Additional tax relief for businesses affected by federally declared disasters. Special rules not covered in this publication may apply. For more information, see Publication 547, Casualties, Disasters, and Thefts.
The following are some of the tax changes for 2009. For information on other changes, go to www.irs.gov, and click on More Forms and Publications. Then, click on What's Hot in forms and publications, or see Publication 553.
Self-employment tax. The maximum net self-employment earnings subject to the social security part of the self-employment tax increases to $106,800 for 2009.
Standard mileage rate. For 2009, the standard mileage rate for the cost of operating your car, van, pickup, or panel truck for business miles is 55 cents per mile. For more information, see Car and Truck Expenses in chapter 8.
Accounting methods. Certain small business taxpayers may be eligible to adopt or change to the cash method of accounting and may not be required to account for inventories. For more information, see Inventories in chapter 2.
Reportable transactions. You must file Form 8886, Reportable Transaction Disclosure Statement, to report certain transactions. You may have to pay a penalty if you are required to file Form 8886 but do not do so. You may also have to pay interest and penalties on any reportable transaction understatements. Reportable transactions include:
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Transactions the same as or substantially similar to tax avoidance transactions identified by the IRS,
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Transactions offered to you under conditions of confidentiality for which you paid an advisor a minimum fee,
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Transactions for which you have, or a related party has, contractual protection against disallowance of the tax benefits,
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Transactions that result in losses of at least $2 million in any single tax year ($50,000 if from certain foreign currency transactions) or $4 million in any combination of tax years,
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Transactions entered into before August 3, 2007, with asset holding periods of 45 days or less and that result in a tax credit of more than $250,000, and
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Transactions the same or substantially similar to one of the types of transactions the IRS has identified as a transaction of interest.
For more information, see the Instructions for Form 8886.
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