Small Business Tax

Section 179 vehicles should be a key part of your small business tax deduction strategies. Can Section 179 property fit in with your business tax strategies?

Let Business Management Daily help you get each and every rental property depreciation credit and business tax deduction you’re entitled to.

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While many 401(k) plan participants jumped ship following the stock market’s plummet in 2008, some have slowly been returning to the fold. Strategy for business owners: Add an “automatic enrollment feature” to your 401(k). This will encourage those employees still on the bubble to participate in the plan. In turn, you may be able to stockpile more money for your own retirement.

Q. I’m selling my house where I’ve claimed home office deductions in the past but not depreciation. Will my home sale exclusion be reduced?

The buzz about Roth IRA conversions is getting louder. And why not? Beginning in 2010, the IRS eliminated the prior restriction that disallowed conversions for taxpayers with an AGI above $100,000. And you can split the taxable income triggered by a 2010 Roth conversion evenly over 2011 and 2012. But should you convert to a Roth? That’s another story.

Thanks to a new law change, longtime homeowners can now get a piece of the homebuyer credit pie. But you have to move fast if you plan to buy a new home. To qualify, you must complete the purchase before May 1, 2010. If you secure a binding contract before May 1, you have until June 30, 2010, to finalize the sale. Best of all, you can claim the credit on your 2009 return—even if you buy the home in 2010.

Q. I live in a rural area where sidewalks are being installed and fixed. Can I deduct the extra property tax assessments?

The “Worker, Homeownership and Business Assistance Act” includes a powerful tax-saver for struggling business owners. It extends and expands the earlier Stimulus Act’s tax break for net operating losses. Strategy: Let the tax law do double duty. If you qualify, you can take advantage of the enhanced NOL carryback rules for both 2008 and 2009. A business that carries back an NOL to a profitable tax year is entitled to a quick tax refund from the IRS.

The end of the year came and went without formal approval of the “Tax Extenders Act of 2009.” But once enacted, the new law would retroactively extend a bunch of key tax provisions that expired after 2009. Generally, it will preserve these tax benefits for one more year. Here are the main tax winners for individuals and businesses:

Maybe you’re not planning to move anytime soon despite the new homebuyer credit. As long as you’re staying put, you might decide to invest some money into the house. But you generally receive no current tax benefit from home improvements. Strategy: Make home improvements needed for medical reasons. If certain requirements are met, you can deduct a portion of the cost this year.

Starting Feb. 1, the IRS will begin intensive audits looking into the employment tax compliance of 6,000 randomly selected employers. One key target: identify employers that are improperly misclassifying employees as independent contractors. If your company is selected for audit, follow good IRS examination management practices.

Q. I transferred mutual fund shares worth $3,000 to my niece for her graduation. My basis was $2,500. If she sells the shares for $2,200, can she deduct the full loss?

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