Q: I have heard that Congress will pass tax relief for small businesses this year. True?
A: I doubt it. I think it is all about election year posturing. The two parties like to point fingers at each other.
The House has approved a measure to allow firms with fewer than 500 employees to claim a tax deduction equal to 20% of their income from U.S. sources. The Senate takes a different tack, allowing companies that increase their payrolls in 2012 to get a tax credit of 10% of the additional wages, up to a maximum credit of $500,000. The Senate measure also reinstates 100% bonus depreciation for all of this year.
Normally, House taxwriters would be inclined to consider the Senate proposal, especially since they like the bonus depreciation change. But this is an election year, and the House GOP is wary of passing a bill that makes Senate Democrats look good.
