Stimulus checks have begun arriving in the Teche Area and what many business owners might not be aware of is the 2008 Economic Stimulus Act provides tax benefits to businesses, as well.  

The Internal Revenue Service said incentives for businesses “include a special 50 percent depreciation allowance for 2008 purchases and an increase in the small business expensing limitation for tax years beginning in 2008.”

IRS Media Relations Specialist Dierdre Harris said depreciation is an income tax deduction that allows a taxpayer to recover the cost or other basis of certain property over several years.

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“It (depreciation) is an annual allowance for the wear and tear, deterioration or obsolescence of the property,” she said. “Under the new law, a taxpayer is entitled to depreciate 50 percent of the adjusted basis of certain qualified property during the year the property was placed in service.”

For the 2008 tax year, the new form will be called Form 4562-FY.

Expensing limits have changed as well with the Stimulus Act.

According to the IRS “a qualifying taxpayer can elect to treat the cost of certain property as an expense and deduct it in the year the property is placed in service instead of depreciating it over several years.”

“Under the new law, a business can expense up to $250,000 of property purchased in a tax year beginning in 2008,” Harris said. “Without this Stimulus Act, the expensing limit would have been only $128,000.”

Anne Dugas, small business advisor for the Iberia Industrial Development Foundation, said stimulus practices were first used after the Sept. 11, 2001, attack on the World Trade Center in New York City and then again in the “Go Zone” after hurricanes Katrina and Rita to stimulate the local economies.

“We just want to make sure that businesses are aware that this exists,” Dugas said.

“So much of the focus of the Stimulus Act has been on the consumer side of it, and we want to make sure businesses, small and large, ask their CPAs how they can take advantage of these investment incentives.”

CPA and partner with Boudreaux, Henderson and Co. Fran Henderson said if a business has some equipment needs or is anticipating some equipment needs in the next year, now is the time to do it.

“This is part of the Economic Stimulus Act of 2008 and is designed to encourage businesses to increase their investments,” she said.