Thanks to the recent Bush tax acts, you can deduct on your 2003 tax return either 30 percent or 50 percent of the cost of qualifying new assets that you bought and placed in service last year. The remaining amount is then depreciated using standard tax rules.
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.
Instead of grabbing your maximum first-year depreciation write-off (as described above), you can choose another route: Mix and match depreciation methods to claim a smaller first-year depreciation write-off and thereby fine-tune your business's 2003 taxable income level.
Q: I run two sole proprietorships out of my house. Do I need to use separate rooms for each business if I want to claim home-office deductions? W.D., Smyrna, Ga.
Before wrapping up your business tax return, rack your brain (and your records) to make sure you haven't missed any juicy write-offs.
March 15 isn't just the deadline for corporations to file 2003 calendar-year income tax returns. It's also the deadline for calendar-year C corporations to switch to S corporation status for 2004.
1. Self-employed? Deduct full health premium
Finally, self-employed people can write off 100 percent of their health insurance premiums (up from 70 percent in 2002).Note:
You can reap significant additional tax savings by making your spouse an employee of your sole proprietorship or single-member LLC and setting up a medical expense reimbursement plan. That strategy could let you deduct all your family's health costs (including uninsured expenses) on Schedule C, plus it could lower your self-employment tax bill.
If you receive a phone call from someone who asks for personal financial data and claims to be from a federal agency, such as the IRS, ask that person to put the request in writing.
Q: We own a vacation home in Vermont that we are leaving to our adult son in our wills. The home cost $95,000 and is now worth around $300,000. We've made about $15,000 in improvements over the years. Will our son owe any income tax if he inherits the home in the next few years? M.M., Stamford, Conn.
Q: My brother borrowed $20,000 from me back in 2000. We set up a payment plan with 7 percent interest payments. But he only paid back $2,700 before he died last year without any real assets. Can I deduct the unpaid balance on my 2003 return? K.R., Newburgh, N.Y.
You've probably heard that hiring your children is a great tax-saving move. Their income is taxed in their low tax bracket, and as long as you handle things correctly, your company can deduct the compensation.