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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.

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Q. A recent article about using a vehicle for business said a taxpayer will likely do better deducting actual expenses. But isn’t this misleading?

Frequently, owners of C corporations are accused of receiving excessively high compensation amounts, to avoid having profits taxed at both corporate and individual levels. Conversely, S corporation owners may attempt to keep their salaries low to avoid employment taxes on wages. Strategy: Arrange “reasonable” compensation for services actually rendered.

As the owner of the business, you may feel that you deserve more retirement plan benefits than other employees. But tough nondiscrimination rules can work against you … unless you’re clued in to one of the best-kept secrets in the tax law.

The new American Taxpayer Relief Act (ATRA) encourages small business owners to “put their money where their mouth is” by extending a unique tax break. Strategy: Inject additional capital into your corporation in exchange for shares of “qualified small business stock."

The TV show “Hoarders” doesn’t portray the obsessions of business owners. But you might trigger tax problems if you can’t help stockpiling too much cash in the company’s cupboards. Strategy: Do your best to avoid the “accumulated earnings tax.”

According to a new report by the Treasury Inspector General for Tax Administration, the IRS needs to get tougher on certain charitable donations.

Q. A recent article seems to indicate that Roth IRA conversions are subject to the 3.8% Medicare surtax, but I thought that all retirement distributions are exempt. Were you wrong?
Don’t miss the first installment of “estimated taxes” for 2013. The deadline for the first quarter of 2013 is April 15. Strategy: Navigate the “safe harbor” rules in the law. Otherwise, you could be held liable for an underpayment penalty plus interest.
Don’t assume that you have to go along with the crowd on your 2012 tax return. Case in point: If you’re self-employed, you may qualify for a home office deduction if your home is your principal place of business or where you regularly meet or deal with customers, clients or patients in the normal course of business.

Under the American Taxpayer Relief Act (ATRA), the $125 monthly tax exclusion for employer-provided mass transit and vanpooling benefits has been hiked up to match the $240 monthly exclusion for parking fees, retroactive to Jan. 1, 2012. But ATRA didn’t explain how employers should handle this retroactive increase for the 2012 tax year. Now the IRS has issued valuable guidance to employers.

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