• National Taxpayer Advocate to IRS: Home Office
  Should Be Standard Write-Off
• Mileage Rate, Business Partnership Definitions Round Out 2007 Tax Changes
• Small Businesses Drove U.S. Economy In 2006
• Did You Know?

National Taxpayer Advocate to IRS: Home Office Should Be Standard Write-Off

Yet another prominent advisor to the IRS is joining the National Association for the Self-Employed (NASE) in calling for a standard home office deduction. National Taxpayer Advocate Nina E. Olson, an autonomous advisor to the Internal Revenue Service (IRS), chided policymakers who have been reserved in their support of a standard tax deduction for those operating a home office. It’s a message the NASE has been preaching for a long time, and hopes that lawmakers will finally start listening. In her report, Olson wrote: “Complexity should not be a tool to protect the [tax revenue] budget. It makes sense to reduce IRS and taxpayer burden in administering this congressionally authorized deduction when data clearly establishes both the underutilization of the deduction and an increasing trend in the use of home offices. In addition, simplification of the deduction is designed to minimize opportunities for inadvertent noncompliance, which will likely save compliance resources.” Olson turned to the NASE for information regarding utilization trends of the home office deduction for her report. A member poll conducted by the NASE in 2005 found that complexity and burden of the home office deduction paperwork and fear of an IRS audit hinders home-based business owners from receiving the deduction on federal tax returns. Read the National Taxpayer Advocate 2007 Annual Report to Congress by visiting http://www.irs.gov/advocate.

Mileage Rate, Business Partnership Definitions Round Out 2007 Tax Changes The April 15th deadline to file taxes is still a few months off, but there are a few tax law changes to keep in mind while preparing 2007 tax forms, including an increase in the standard mileage rate and a new rule that no longer requires that a husband and wife business file a partnership tax return. “There are a few notable tax law changes for the 2007 filing season that can put more money in your business checkbook,” said NASE national tax advisor, Keith Hall. “Talk to your tax professional or financial planner to make sure you take advantage of all possible deductions and adjustments.” The following tax law changes relate to 2007 returns: Last-Minute AMT Changes Delay Filing Deadline. Taxpayers who file certain Alternate minimum tax (AMT) related forms must delay filing until February 11, 2008. Visit www.NASE.org or www.IRS.gov for more information. AMT Exemption Increase for 2007. For tax-year 2007 only, the AMT exemption was raised to $66,250 for a married couple filing a joint return, up from $62,550 in 2006. The exemption rises to $33,125 for a married person filing separately, up from $31,275, and it rises to $44,350 for singles and heads of household, up from $42,500. Contribution Limits for IRAs and Other Retirement Plans. This year for the first time income limits for the saver’s credit are adjusted for inflation. The saver’s credit supplements other tax benefits available to low- and- moderate income taxpayers who save for retirement. Standard Mileage Rates Adjusted for 2007. The standard mileage rate for business use of a car, van, pick-up or panel truck rose 4 cents to 48.5 cents per mile. Self-Employment Tax. The maximum amount of net earnings subject to the FICA portion of the self-employment tax for tax years beginning in 2007 has increased to $97,500. All net earnings of at least $400 are subject to the Medicare part of the tax. Husband and Wife Business Definitions Change. As a result of the Small Business and Work Opportunity Tax Act of 2007, passed in mid-2007, qualified husband and wife ventures are no longer required to be treated as a partnership. Alternatively, each spouse can choose to report their share of earnings or losses from the venture without filing a partnership return. Find out more information about these and other tax law changes for the 2007 filing season at www.IRS.gov. NASE Members can also get fast, knowledgeable answers to tax questions from the CPAs at TaxTalk. Visit http://taxtalk.nase.org/taxtalk.asp to submit a tax question, watch or download tax advice from Keith Hall and browse the TaxTalk resource library.

Small Businesses Drove U.S. Economy In 2006 A new report released by the Small Business Administration’s Office of Advocacy documents the crucial role small businesses played in the U.S. economy in 2006. The study, titled “The Small Business Economy: A Report to the President for 2007,” is the most recent edition of the Office of Advocacy's annual report on small business in America. The report examines the state of small businesses and the environment within which they operate. This includes research on financial and federal procurement marketplaces, minority- and veteran-owned businesses, social entrepreneurship, and pre-venture planning. It also reviews the role that small businesses played in the U.S., finding that “small businesses continued to be at the core of continuing economic expansion in 2006. Output rose, business income and profits were up, and unemployment was down.” In response to the report, Kristie Darien, executive director of the legislative offices of the NASE, stated that “it provides further evidence of how crucial the nation’s small businesses are to a growing economy, and it demonstrates the continued resilience of entrepreneurs and small businesses despite the various uncertainties plaguing the economy at that time.” To access the entire report, visit the Office of Advocacy Web site at www.sba.gov/advo.   Did You Know? Small-business owners and organizations have nominated over eighty cumbersome regulations for federal review. Find out more about this SBA initiative and about how the Top 10 rules are being evaluated by visiting www.sba.gov/advo/r3. Washington Watch Online Visit the NASE Advocacy Web page to view archived editions of Washington Watch. While you’re there, read the latest updates from the Washington, D.C. office, write your Congressperson, and find out how you can join the fight for micro-business. Web site: http://advocacy.NASE.org.