Small business tax predictions for 2012

The continuing discord in Congress has introduced uncertainty into small business tax predictions for 2012. Despite this, Entrepreneur magazine recently offered several tips on what to expect.

With all the furor over the last-minute payroll tax extension - a 2 percent cut was extended through February just eight days before the existing allowance was set to expire - it was easy to forget about business tax breaks such as bonus depreciation and the Section 179 deduction. Small business owners should be sure to take advantage of the 100 percent bonus depreciation write-off and the opportunity to immediately deduct as much as $500,000 worth of first-year expenses through Section 179.

Additionally, research and work opportunity credits are still in existence, particularly for companies that hire veterans. The outlook is less certain for healthcare tax credits and estate tax rules.

A recent KPMG study found that small business tax audit activity is on the rise, suggesting entrepreneurs should ensure tax law compliance and be prepared to provide the documentation to auditors. Nearly two-thirds (61 percent) of the 890 corporate tax executives surveyed reported that federal tax dispute activity had increased over the past 12 months, and the majority expected the trend to continue.