Posted by Keith Hall (NASE National Tax Advisor) - We finally got some answers out of Washington, D.C. Well, at least one answer that is. Congress finally voted to extend the two percent payroll tax reduction past February 29th and through the end of the year. Even though they waited until the last minute and kept all of us guessing, the extension is welcome news and on behalf of all 22 million of us self employed business owners I say, “Thank you”. For the self-employed business owner this extension means that our Self Employment Tax will remain at 13.3% of net earnings instead of reverting to 15.3%, as in previous years.
Even though we say thanks to our representatives in Washington, this is no time to stop. There are still many issues faced by small business owners that should be addressed. The deduction for health insurance premiums on Schedule SE, a standard deduction for the home office, alternative minimum tax exemptions, depreciation options, and the increase in deductibility for startup costs are all items pending before Congress that need to be addressed. I know it is an election year and many things still need to be debated and negotiated and compromised. Let’s all take a quick minute to let them know that we support the process and we support the debate but mostly we support small business. We are trying to manage the single segment of our economy that generates over 70 percent of all new jobs. All we ask is that they just tell us what the rules are going to be.
Go to NASE.org and find the Legislative Action Center. Enter your zip code and you will find a link to your Congressional representatives. Access the email function and let them know that you are waiting. And that each of these issues has a material effect on your ability to manage your business and to continue creating new jobs. Small business owners make a tremendous difference to our economy and its time they said “Thank you” as well.