Are you collecting the maximum tax breaks from the stimulus law passed last year? The IRS issued a fact sheet touting the tax perks available to small business owners under the American Recovery and Reinvestment Act of 2009 in a February bulletin.

Here are my top 5 tax breaks from the stimulus law:

1. Bonus depreciation. Allows a business to deduct 50% of the cost of a new asset in the year it is placed in service.

2. Section 179 expensing. A small business can elect to expense up to $250k of the cost of qualified assets.

3. Net operating losses. Under the new law, most businesses can elect to carry back losses for up to five years, instead of the usual two years.

4. Discharge of business debt income. The stimulus law allows businesses to recognize discharge of indebtedness income over five years, rather than requiring full recognition of in 2009.

5. Exclusion of gain on the sale of qualified small business stock. Increased to 75% for any gain from a sale between February 17,2009 and January 1, 2011.

Talk to your tax professional about taking advantage of these tax breaks when filing your return.

For most Americans, filing taxes is a huge headache. It is a confusing process that takes a great deal of time. Many people have no idea how to go about complying with the rules or how to fill out the forms properly, especially since the rules and regulations are constantly changing. For these reasons, there are a number of free or low cost ways to get help with filing taxes.

Once such program is the IRS Free File program. The Free File program provides free federal income tax preparation and electronic filing for eligible taxpayers through a partnership between the IRS and the Free File Alliance LLC, a group of private sector tax software companies.

Free tax preparation and filing via online software is available to anyone with a 2009 Adjusted Gross Income of $57,000 or less. If that’s you, head to the IRS website and choose from a list of approved tax preparers, and get started. If you aren’t sure which preparer to use, answer a few quick questions and the Free File program will suggest some matching companies.

If you made more than $57,000, or just want to do your own taxes, Free File provides a section with blank forms you can fill out yourself. There are many different federal tax forms to choose from, and the program allows you to file your federal taxes electronically.

Filing taxes is a long tedious process, and for many Americans help beyond simply filling in forms is needed. For this reason, it is important that you consult with a tax professional if your tax return will involve significantly more than entering W-2 and bank account tax information.

But, if your adjusted gross income was $57,000 or less, and you only had employment income and bank account interest, the Free File program may be a good match for you.

Bootstrapping entrepreneurs need as many low to no-cost resources as they can get their hands on to start and run their businesses.

A good, free resource for start-up tax information to check out is the IRS Virtual Workshop. The surprisingly modern interactive site is designed to help new businesses owners understand federal tax obligations and procedures. Users can choose from nine different lessons:

1. What you need to know about federal taxes and your new business;
2. How to set up and run your business so paying taxes is not a hassle;
3. How to file and pay your taxes using a computer;
4. What you need to know when you run your business out of your home;
5. How to set up a retirement plan for yourself and your employees;
6. What you need to know about federal taxes when hiring employees/contractors;
7. How to manage payroll so you withhold the right amount from employees;
8. How to make tax deposits and file your payroll taxes using a computer;
9. What you need to know about Federal Unemployment Taxes (FUTA).

The site is a good place to start your education on federal business taxes or to brush up on information you may want to ask your CPA about.

Every new business incurs start-up costs for a variety of things such as market research, training, and fees paid to consultants, accountants, and attorneys. The good news is that most of those costs are deductible, but the bad news is that the rules for deductibility and timing are not as clear as those for operational expenses.

Start-Up Costs Section 195 of the Internal Revenue Code is the main provision related to the deductibility of start-up costs. According to this section, deductible start-up costs are those that would be deductible if they were incurred by an existing business. Deductible start-up costs include:

• Analysis of potential markets, facilities, products, labor supply, etc;
• Advertisements announcing the business opening;
• Costs of training employees;
• Travel and other necessary costs for securing prospective distributors, suppliers or customers;
• Consulting and professional fees.

Organizational Costs Another category of pre-operational expenses that are considered a different category and that may be deductible are organizational expenses. These expenses include:

• Cost for organizational meetings;
• Costs related to temporary directors;
• State incorporation fees;
• Legal and accounting fees related to setting up a corporation or partnership.

Amount of Deduction The maximum amount that can be deducted in each category in the first year is $5,000. However, the deduction is reduced by the amount by which total start-up costs exceed $50,000. Any amount not written off in the first year must be deducted over 180 months, starting in the month after the business begins. So, if your start-up costs are $4,500, you would be able to take a deduction for the entire amount in the first year. On the other hand, if your start-up costs were $55,000, you would not be entitled to a deduction in the first year and would be required to amortize the costs over 15 years ($3,667/year).

Traps The rules related to the deductibility of start-up and organizational expenses are somewhat intricate, so watch out for a few of the common traps:

• Costs related to issuing or selling stocks or securities are non-deductible. These costs include professional fees and commissions.
• Costs of transferring assets to the business are not deductible.
• If an individual incurs costs to go into business and the attempt fails, those costs incurred before making a decision to acquire a specific business are non-deductible.

A Strategy Many of the limitations associated with start-up costs are alleviated if business operations have commenced, so it may make sense to try to generate revenue-producing activity as early as possible. An early start date may allow a current deduction for expenses that otherwise would be deferred start-up costs.

More information about tax treatment of business start-up expenses is available in IRS Publication 535, Business Expenses.