Start-up Costs from a Tax Perspective By the Staff of Duban Sattler and Associates, LLP

Starting a new business brings a host of costs that go into effect before the business even gets off the ground. When filing a tax return, these start-up costs, which are considered capital expenses, can be lumped together into a single category and deducted as such. Later the filer can choose to amortize the individual expenses over time, which means deducting the cost in equal increments over a period of 60 months or more. Most new business owners must pay for advertising, training, office equipment, and other expenses before even launching the company. If the business plan is halted and the organization becomes defunct before any business is done, these pre-functioning costs are not deductible and become the responsibility of the individual to pay—assuming the business is not a corporation. Expenses accrued after beginning the business can be deducted and would count as capital loss.

Based in Los Angeles, Duban Sattler and Associates, LLP, delivers high quality financial and tax services to a select clientele.

Duban Sattler on New Tax Deduction Allowances for 2012

The Internal Revenue Service recently released a set of new tax deduction regulations, which will take effect for 2012 returns. The IRS has broadened existing tax brackets and increased the amounts allowed for standard deductions and personal exemptions, all due to the rise of inflation.

When they file in 2013, taxpayers will be able to value each personal and dependent exemption at $3,800. Single individuals and married couples filing separately will enjoy a standard deduction of $5,950, and married couples filing jointly will see a standard deduction of $11,900. Heads of households will deduct $8,700. These figures represent a rise of from $100 to $300 over the previous year’s allowances.

In addition, the maximum Earned Income Tax Credit extended to lower- and middle-income working families will go up by $140, to reach a 2012 figure of $5,891. Households earning up to $50,270 will be eligible to file for the EITC, representing a rise over the 2011 income threshold, which was $49,078. The IRS has also increased the allowable foreign earned income deduction by more than $2,000, and expanded other criteria as well. To make sure you take full advantage of all current and future regulations, consult your tax preparation professional.

Duban Sattler and Associates, LLP, is a Los Angeles accounting, tax preparation, business management, and financial planning firm headed by Dennis L. Duban and Troy L. Sattler.