Q: I've heard that food expenses will be deductible beginning next year. Will itemizing be required? O.D., New York
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: I own real estate that I plan to sell to my son through an installment sale. My CPA says this can't be done because we're related parties. Is this true? D.R.T., St. Petersburg, Fla.
If you're the big cheese at your company, you can control your own tax destiny to a certain extent. For example, you can usually time year-end bonuses to your personal tax advantage.
U.S. tax laws provide a variety of tax breaks for higher education expenses, but high-income people are usually shut out of these goodies. Example: Joint filers can't claim the above-the-line deduction for tuition expenses if their adjusted gross income exceeds $160,000 ($80,000 if you are unmarried).
Social Security taxes take a big bite out of your paycheck. That's why it's a huge relief to highly paid employees when autumn finally rolls around. Reason: Once they clear the Social Security wage base for the year, they won't need to pay any more Social Security tax for the year.
Question: My wife and I operate separate self-employed businesses. This year, I expect to show a big profit, so I plan on buying new machinery and tools before Jan. 1 that I can expense. My wife's business is likely to show a loss. Will her loss reduce the amount I can claim under Section 179? If so, what can I do about it? — C.S., Rochester, N.Y.
The new bankruptcy law that took effect Oct. 17, protects funds held in a qualified retirement plan from outside creditors. There's no limit on the amount you can shield from creditors.
Although Roth IRAs have been around for a few years, some taxpayers are still spooked by this newfangled version of the traditional IRA. As you'll see, 2005 may be an especially good year to look at different ways you can put money into a Roth IRA before year-end.
Should you contribute to a Roth IRA or a traditional IRA? You may be surprised to learn that the Roth IRA beats the traditional IRA almost all the time. Let's look at seven common scenarios. In all these examples, we've assumed you would leave an initial contribution in the Roth or regular IRA for a number of years and then pull out the money as a lump sum in retirement after age 591/2. For simplicity's sake, we'll assume a 10 percent before-tax rate of return for each example.
With gas prices soaring, the IRS threw business travelers a bone recently by allowing them to deduct 48.5 cents per driving mile for the final four months of 2005. But, at the time, the IRS didn't touch the standard deduction rate for charity-related driving, which remained at a paltry 14 cents per mile.