Q: I hired a contractor to build a deck on our house for $15,000. We gave him $5,000 up-front for materials, etc. Now he's skipped out and we can't find him. Can I deduct the $5,000 deposit as a casualty loss deduction? R.S., Blawenburg, N.J.
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.
Congress often tinkers with the tax code, but rarely does it throw business owners a brand-new deduction. That's why last year's tax law—the American Jobs Creation Act— created such a stir. Starting in 2005, the law authorizes a new write-off for qualified manufacturers that could eventually amount to a 3 percent rate cut.
Q: I gave my daughter stock shares that I bought for $10,000. On the day I gave her the shares, they were worth about $12,000. Now, it's jumped to about $16,000, and I've advised her to sell. Is her taxable gain the full $6,000? P.L.A., Santa Barbara, Calif.
As an S corporation owner, you can avoid the double taxation that plagues income earned by a regular C corporation. Instead of being taxed twice—once on the corporation level and once personally—income flows through to the S corporation shareholders. So, it's only taxed once at your personal level.
Before you know it, summer will be over and another school year will be under way. In our last special report, we focused on deducting your child's education costs. But what if you are the one going back to school or enhancing your learning in conferences or seminars? As long as you make the tax grade, you can deduct the work-related education cost as a business expense. But it's easy to flunk out when you file your return. Read on to learn the rules.
Suppose you're stuck in a financial pickle and can't scrape up all the money the IRS says you owe. That doesn't mean you need to sell the house or flee the country. If the IRS agrees to a compromise, you can work out a mutually beneficial deal that allows you to pay what you can, when you can.
Q: I started my own consulting business in 2004 after I lost my corporate job. Instead of accepting my state tax refund from 2004, I chose to apply it to my state taxes for 2005. Do I owe federal income tax on that amount? N.H., Tenafly, N.J.
The IRS recognizes that domestic abuse can cause financial, as well as physical and emotional, distress. It just issued Publication 3865, Tax Information for Survivors of Domestic Abuse.
Q: In a recent Mail Call answer, you said a person can deduct donations to some charities in Canada, Mexico and Israel. (5/30/05 issue) Do you have authority for that statement? M.L.
Q: I've been working for a company that is rapidly losing money. I've heard through the grapevine that the owners haven't paid the employment taxes for the past year. Could that cause me trouble personally with the IRS? E.L.C., Cleveland