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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.

Q: You said retirement plan participants must pay a 10 percent penalty tax for withdrawals before 55 (see 4/18/05 issue). Isn't the correct age 59 1/2? C.F., via e-mail

Suppose you want to add the new guaranteed minimum withdrawal feature (see above) to an existing variable annuity, but the issuer doesn't allow that option. Are you out of luck? Not necessarily.

Q: I'm switching my business from a C corporation to an S corporation. I understand that S corporations don't pay any tax. Will I need to make quarterly tax payments? A.P., Cincinnati

Do you pay someone to watch your under-age-13 children while you and your spouse work? If so, you probably know that you can claim the dependent care credit, commonly called the "child care credit," for your qualified expenses. That includes your costs for day care centers, baby sitters and preschools.

First came the 401(k), which, in just a quarter-century, became the most popular retirement plan of all time. Then, Roth IRAs were born in 1998, allowing millions of Americans to build up retirement nest eggs that they could tap into tax-free.

Question: I am 62, married and plan to retire in June. I know that I can start collecting 80 percent of my Social Security benefits this year, but I'll also be taxed on those benefits. Should I hold off collecting benefits until I reach 65 or later to avoid the tax? Or should I start taking benefits now because of the new Social Security proposals? (I'm in the 28 percent tax bracket.) – J.H., Columbus, Ohio

Uncle Sam wants your tax money ... now. So, if you aren't sending the IRS enough money in your quarterly tax installments, you may need to pay an extra interest-rate penalty.

Q: We run our business as an LLC (a husband and wife partnership) and have a SIMPLE retirement plan. The company deducts the contributions it matches for employees. Can it also deduct the matches for my husband and me? L.J.S.

Most people think of life insurance strictly as income replacement for their family if they suddenly die. But if you no longer need that big life insurance policy and you're looking for a big write-off this year, consider this strategy

Q: In a recent issue, you said that both engineering and architectural services qualify as "manufacturers" for purposes of the new manufacturing deduction (see 3/21/05 issue). Can you tell me if a laboratory that does tests (for physicians) created from raw materials qualifies for the deduction as this type of service? J.V.M., Md.