If you're like most high-income taxpayers, you probably use your home PC to help manage your investments. But unless you're a highly active trader and your investment activity constitutes a bona fide business, your depreciation deductions for the machine are severely limited.
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.
Do you plan to raid your retirement plan early? If you use the money for medical payments, you can avoid the usual 10 percent penalty tax on early withdrawals.
As the economy heats up, you'll need to work harder to retain good employees. One good tactic: Set up an employee-achievement-award program. If you handle things the right way, they are tax-free to employees and fully deductible by your company.
Q: I operate a small relocation company with 10 full-time employees and a few part-timers. We don't have a retirement plan. I remember reading something recently about a tax break for setting up a plan. Is there such a break? E.R.M., Chicago, Ill.
Q: I'm 56, my wife is 55 and both of our kids graduated from college. I maxed out my 403(b) plan at work last year, but I still want to increase my retirement savings. If we're over the income limit for Roth IRAs, can we both contribute to nondeductible IRAs? T.R., Logan, Utah
Q: I am a private attorney going into practice. With the new 15 percent tax rate on dividends, am I better off tax-wise setting up the practice as a personal service C corporation, rather than a self-employed taxpayer filing Schedule C? J.J., Los Angeles, Calif.
Q: I'm investing in dividend-paying stocks in a foreign country. Because of withholding by the government, the dividends are substantially reduced. Do I have to pay tax on the full amount of the dividends? W.L., Braintree, Mass.
The numbers are deceiving: IRS gum-shoes audited only 0.57 percent of individual tax returns in fiscal year 2002. The rate isn't much higher (only 1.45 percent) for Schedule C filers with incomes above $100,000.
Q: I read your recent article about filing separate tax returns. If my wife and I file separately, do we simply split our itemized deductions? G.S., Manchester, N.H.
Q: For years, I've been giving away appreciated stock to my low-bracket children. I recently gave $11,000 worth of my C corporation stock to my daughter, who sold it. My CPA says this technique is not allowed. Is that correct? T.J., Virginia Beach, Va.