If you run your business as a husband/wife partnership, you’re forced to fill out a complicated Form 1065 (U.S. Return of Partnership Income) every year. But if you live in one of the nine "community property" states (see list at left), we have good news for you
Before you send off your 2003 tax return, make sure you didn’t overpay the required amount of FICA taxes. For 2003, the Social Security rate is 6.2 percent on the first $87,000 in wages. The 1.45 percent Medi-care tax rate applies to all your wages. Together, those make up the 7.65 FICA tax.
Q: My father died in 1998, and we decided to pay off the estate tax using the installment method. Now that estate tax is being repealed, will we still have to pay installments after 2009? R.V., Plymouth, Mass.
Q: I use my cell phone a lot for charitable activities. In fact, that’s the reason I bought it. Can I deduct the phone costs as a charitable donation? N.B., Kansas City, Mo.
Q: My husband and I have lived in our home for 32 years. We bought it for about $80,000, and now it’s worth more than $500,000. My husband died last year, and I’m planning to sell the home. I read about the $250,000 home-sale tax exclusion for single people and $500,000 for married people. Am I limited to $250,000? A.T., Rockaway, N.J.
Q: I’m wondering about the repercussions of the break in the relationship between gift and estate taxes. If I make a $1 million gift in 2004 and pay no gift tax by using up my gift-tax exemption, will I still have an unreduced estate-tax exemption of $2 million in 2008? L.S., New York, N.Y.
Q: I run two sole proprietorships out of my house. Do I need to use separate rooms for each business if I want to claim home-office deductions? W.D., Smyrna, Ga.
You’ve probably heard that hiring your children is a great tax-saving move. Their income is taxed in their low tax bracket, and as long as you handle things correctly, your company can deduct the compensation.
It will soon be springtime in Washington, and for the past three years, that has meant tax breaks spilling forth across the land. But not this year.
Sometime between now and April 15, you’ll probably sit down with your tax adviser to pour over receipts, write-offs and changes to your personal tax situation. You can save on your tax bill—and your tax-preparation fees—by avoiding these common errors