A major 2004 tax-law change put some real teeth into the “constructive receipt” rules for nonqualified deferred-compensation plans. In short, it set new requirements for employees to be able to postpone federal income tax on future payments earmarked for them under deferred-comp plans.
If you use (or plan to use) Section 529 college savings plans, take note: A few small changes buried in a new law could help you save even more in those tax-advantaged college-savings vehicles.
The IRS just released official guidance on the 2005 energy-tax law that revamps the type of tax credits you can earn for buying environmentally friendly vehicles. (IRS Notice 2006-9)
Business owners frequently clash with the IRS over whether workers should be considered employees or independent contractors. You face a higher tax burden when workers are considered employees. To help you determine a worker’s classification,use this 20-question test, which has evolved from various court cases and IRS rulings over the years. Most questions relate to the degree of control that you exert over the worker.
It’s tough to qualify for a medical-expense deduction, but it’s not impossible. The law says you can deduct any unreimbursed medical and dental expenses that exceed 7.5 percent of your adjusted gross income (AGI). But don’t give up so quickly. You may be able to squeeze out a deduction this year if you incur some out-of-the ordinary costs. Here are three ways to jump the hurdle in 2006:
Sadly, the bonus depreciation rules have expired. That means you’re stuck with regular depreciation deductions under the Modified Accelerated Cost Recovery System (MACRS), which requires you to write off business equipment over several years. Don’t despair. You still have the Section 179 deduction privilege on your side. And, when used correctly, this not-so-secret tax weapon can help you rescue big current-year write-offs … at least for now.
Last January, Congress voted to let businesses and taxpayers deduct donations for Asian-tsunami relief on their 2004 returns as long as they made the donation by Jan. 31, 2005.
You can’t generally deduct the cost of commuting back and forth between your home and work; that’s treated as a nondeductible personal expense. But with a bit of creativity, you can still claim generous tax deductions for certain types of local driving. Here are three ways to squeeze out some extra tax-deductible mileage.
Believe it or not, it’s not the math that trips up taxpayers the most.
Are you waiting until the last minute to file your tax return? Maybe you’re putting things off because you figure you’ll have to pay Uncle Sam a tidy sum. At least you can still put a good-size dent in your tax bill at this late date. Here’s a sampling of seven prime opportunities for tax-return procrastinators.