The American Recovery and Re­investment Act (also known as the “stimulus bill”) passed Congress in February 2009, and contains a few tax incentives that may help your small business – if you act quickly. Here are a few tax credits that can help boost your bottom line next April, if you take advantage of them in 2009:

Section 179 Expensing. Until December 31, 2009, the stimulus doubles the small business ex­pensing limit from $125,000 to $250,000. For the 2009 tax year, small business owners can deduct up to $250,000 for software or pur­chased equipment as soon as it is put to use. Computers, heavy ma­chinery, office furniture, equipment and vehicles may be deducted under Section 179, but property invest­ments, including building or land upgrades are not covered. If you hold off on these investments until 2010, the allowance will drop back to only $135,000.

Estimated Tax Requirement Modified. Many individual small businesses may be able to defer paying a larger part of their 2009 tax obligation until the end of the year. For 2009, eligible individuals may make quarterly estimated tax payments equal to 90 percent of their 2009 tax, or 90 percent or their 2008 tax, whichever is lower. Indi­viduals may qualify if they received more than 50 percent of their gross income from their small business in 2008, and meet other requirements.

Energy-Efficiency Tax Credit. If you’ve been considering making your businesses greener, this might be a good time to take that next step. Under the stimulus package, energy efficiency tax credits have increased from 10 percent of cost to 30 percent, and the maximum credit has been raised from $500 to $1,500. More expensive upgrades, such as geothermal pumps, solar panels and solar water heaters are not limited to the $1,500 maximum. The $200 tax credit cap on efficient windows has been removed as well. This may make 2009 a good year to insulate, upgrade and weather-proof your workplace.

50 Percent Special Deprecia­tion Allowance/Bonus Deprecia­tion. The new law extends the 50 percent depreciation allowance that was available for 2008 acquisitions of qualifying property that was placed in service in 2009. This pro­vision enables businesses to deduct half of the adjusted basis of quali­fying property. While the exten­sion applies to qualifying property placed in service in 2009, it will remain in effect through 2010 for long production period property and certain transportation property.

For additional information on these and other small business tax incentives, you may visit www.irs.gov, or consult with your accoun­tant.

Source: Texas Business Today - Fall 2009 Issue