At least there’s a silver lining in the recession: For the first time in more than three decades, the Social Security wage base isn’t expected to increase next year. The actuaries at the Social Security Administration are predicting that the wage base will remain at $106,800 for 2010 and even beyond into 2011.
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.
Have you seen the ads on TV, or heard them on radio, promoting low-cost payoffs to the IRS for unpaid federal tax debts? Chances are, if something sounds too good to be true, it probably is. And if you’re waiting for the refund from an amended return, it may take awhile longer.
Q. My father is contemplating a reverse mortgage. Will he have to pay tax on the deal?
If you’re buying a home, complete the deal before Dec 1. Under a new law provision, you may be able to claim a credit equal to the lesser of $8,000 or 10% of the purchase price. For this purpose, a “first-time homebuyer” is defined as someone who has not owned a principal residence for the three years prior to the purchase.
The rules for home-office deductions are particularly tough for corporate employees. Even if you legitimately use a home office for business purposes, you may not be entitled to a deduction. It doesn’t matter if you’re the owner of the company. Strategy: Rent the office to the company, which can deduct the rent payments as a business expense. You must pay income tax on the rent payments, but won’t owe employment taxes.
Q. I have an HSA, but I’m turning age 65 in November. Can I still contribute to the HSA if I enroll in Medicare Part A?
Are you a rabid fan of the athletic teams at a local college or your alma mater? Here’s a way to pocket a nifty tax break while supporting the school’s gridders, cagers or other athletes: Donate funds to a college booster club or a similar program. That way, you can deduct all or part of the payment as a charitable contribution.
Have you passed the Social Security wage base of $106,800 for 2009? Once you do, you save 6.2% in Social Security tax on every dollar of wages. Instead of pocketing the cash, you might allocate at least part of it to a 401(k) or other retirement plan.
A new Tax Court decision could produce a better tax result for many owners of LLCs and partners in LLPs. Strategy: Use a loss from an LLC or LLP to offset other highly taxed income. Previously, it was presumed that such losses usually could be used only to offset income from other “passive” activities. But the new case has opened the door to bigger tax savings.
Time is running out on a unique tax break for older taxpayers with charitable intentions. Strategy: Donate funds directly from your IRA. Instead of taking a taxable withdrawal and contributing what’s left after taxes, give the full amount to charity. There’s no tax due on the distribution.