Legislation regarding small business taxes expected

This time of year income taxes are on the minds of many individuals throughout the Chicago area. As individuals make their appointments to have their taxes done, or in the alternative, complete them on their own, legislators in the nation's capital are thinking about taxes associated with small businesses. Rewriting the current tax code that affects small businesses is on the agenda of some. A plan is expected to be released by a representative from a neighboring state.

Though the details of the plan have not been released, it is believed that in addition to small businesses, pass-throughs will be included as well. These types of businesses include partnerships. Pass-throughs are characterized by owners and shareholders who receive the profits from the business paying taxes on the income, rather than the business making the payments. More than half of income taxed this way in 2013 is expected to be paid out to taxpayers who make a minimum of $200,000 each year.

As most are aware, determining how much tax a business needs to pay to the Internal Revenue Service can be tricky. If tax returns are not prepared correctly, an IRS audit may ensue. When this happens it is important to contact someone sooner rather than later who can advocate for the small business owner.

Most small business owners are likely anxiously awaiting the introduction of the legislation, as well as reactions to it. Depending on its contents, as well as the way the other legislators feel about it, there is a possibility that the way small businesses are taxed could change dramatically.

Source: Reuters, "Top House tax lawmaker trains sights on small businesses," Kim Dixon, March 11, 2013

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