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.

The so-called “kiddie tax” may come into play if your child’s unearned income exceeds a specified annual threshold ($1,900 for 2009). In that case, the excess income is taxed at the top marginal tax rate of the child’s parents—regardless of the original source of the funds. Strategy: Keep your child’s investment income below the $1,900 level.

As the year rapidly draws to a close, you can probably use some capital losses to offset capital gains realized after the recent run-up in stocks. But you may not have any viable stock losers in your portfolio that you want to give up at this time. Fortunately, you can still salvage some tax benefits if you own municipal bonds (“munis”) that have been underperforming. But you’ll have to move fast.

Here's a collection of creative employee benefits programs, excerpted from our Compensation & Benefits newsletter: 1. Expectant and new moms get help from co-worker "buddies." 2. Shopping-spree contest helps boost sales, morale. 3. Cash advances help workers dress for success. 4. Employee committees choose company wellness programs. 5. Company pays employees to leave their cars at home. 6. Deployed workers get full pay, benefits and care packages. 7. Medical firm picks reality TV star as its "wellness ambassador." 8. British firm pays for "Botox leave."

Your business can deduct 50% of its entertainment and meal expenses that either follow or precede a substantial business discussion with a client. And if you invite clients to a dinner party at your home, the cost of home entertainment attributable to your business guests is deductible (subject to the 50% limit) even if you never discuss business during the night.

If you’re like most taxpayers, you normally don’t qualify for medical expense deductions. Reason: The expenses are deductible only to the extent that they exceed 7.5% of your AGI. But you should scour your checkbook and credit card statements. You may discover enough qualified expenses to put you over the 7.5% mark for 2009.

Q. I found some HH Savings Bonds from years ago. Do I still owe income tax if I cash them in now?

At tax return time, you must “net” your capital gains and losses for the year. Any net long-term gain is taxed at a maximum 15% rate. Any excess loss can offset up to $3,000 of ordinary income. Strategy: Sell securities at year-end with an eye on taxes.

To determine the value of your business inventory at year-end, you can use either the first in, first out (FIFO) method or the last in, first out (LIFO) method. Strategy: Switch to the LIFO method if the costs of goods are rising or you’ve had a high-income year. The change can result in a larger deduction for the cost of goods sold and a lower taxable income for your company.

If H1N1 flu threatens to shut down businesses nationwide, employers are going to need contingency plans to make sure they keep running. Flexible work schedules, temporary shutdowns and telework can all help—but all have unexpected wage-and-hour implications. Here’s guidance from the Department of Labor on how to handle these tricky issues.

You can deduct your expenses related to your vacation home's rental activity to offset the rental income. You may even be able to claim an overall tax loss for the year. But you can’t claim a tax loss if your personal use exceeds the greater of 14 days or 10% of the days the home is rented out. Tax strategy: Take a winter break straddling this year and next year ...