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.
Small Business Tax Deduction Strategies
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.
Before wrapping up your business tax return, rack your brain (and your records) to make sure you haven't missed any juicy write-offs.
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.
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 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.
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.
Calendar-year 2003 is over, and you can't do anything to change it. But the book isn't closed on tax year 2003.
Have you heard about the new, "creative" way to shift assets from your business to a Roth IRA to skirt the IRA contribution limits? Well, forget that advice and heed this:
The IRS came out swinging last month, issuing formal notice that such transactions would be listed as "abusive tax shelters" and trigger stiff penalties. (IRS Notice 2004-8)
With the stock market heating up, you may have borrowed cash in 2003 for investment purposes or to buy stock on margin.
Of course, you'll want to maximize the write-off for your investment interest. But usually your investment interest deduction is capped at the amount of your total investment income.
Q: In a recent item in your newsletter, you said that sole proprietors, partners and LLC members can use the per-diem method for reimbursing meals and incidental expenses on business travel. (See 11/3/03 issue.) Shouldn't that list also include S corporation shareholder/employees? P.D., CPA, Englewood, Colo.