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.

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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 and other co-owners operate your business as a multimember LLC, you may already know to file a partnership return on Form 1065. Each owner is treated as a partner for federal income tax purposes, so each receives a Schedule K-1 with his or her share of the LLC's 2003 business income, deductions and credits. You report those figures on your 2003 personal return.

Millions of taxpayers now file their tax returns via the Web, and the number is likely to grow. Should you join the crowd?

If you run your business as a husband/wife partnership, you're forced to fill out a complicated Form 1065 (U.S. Return of Partnership Income) every year. But if you live in one of the nine "community property" states (see list at left), we have good news for you

If you took out a home-equity loan last year and injected the resulting cash into your pass-through business (sole proprietorship, S corps, partnership or LLC), you can typically deduct the related in-terest expense. But don't report the interest as an itemized deduction on your Schedule A.

Before you send off your 2003 tax return, make sure you didn't overpay the required amount of FICA taxes. For 2003, the Social Security rate is 6.2 percent on the first $87,000 in wages. The 1.45 percent Medi-care tax rate applies to all your wages. Together, those make up the 7.65 FICA tax.

When meeting with your accountant this tax season, don't be surprised if he or she tries to sell you on a new benefit-
management program or other service.

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.

It will soon be springtime in Washington, and for the past three years, that has meant tax breaks spilling forth across the land. But not this year.

Sometime between now and April 15, you'll probably sit down with your tax adviser to pour over receipts, write-offs and changes to your personal tax situation. You can save on your tax bill—and your tax-preparation fees—by avoiding these common errors

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