Small Business and Work Opportunity Tax Act of 2007 signed into law on May 25, 2007

President Bush signed the Small Business and Work Opportunity Tax Act of 2007 into law on May 25, 2007.  Following are the highlights that will affect most small contractors:

• Beginning in 2008, Full-time students between the ages of 19-23 will be subject to the "kiddie tax" if they do not have earned income greater than 50% of their annual support.
• For 2007, the Section 179 deduction is increased from $112,000 to $125,000.  The phase-out amount is increased from $450,000 to $500,000.
• Off the shelf software qualifies for Section 179 through 2010 (one additional year)
• Returns can be amended for Section 179 through 2010 (one additional Year)
• Beginning in 2007, husband-wife partnerships can elect not to file a partnership tax return.  Instead, they would file two Schedule C's (business income) or two Schedule E's (rental income) with their individual return.