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. I converted my traditional IRA to a Roth on Jan. 6, 2010. Can I still undo the conversion?

Employers can reward top employees, including company owners, by awarding them incentive stock options. Generally, there’s no tax due when the company issues the ISOs or when the individual exercises the options. The IRS taxes the employee only when he or she finally sells the stock. Strategy: Keep the options for the required holding period. As a result, the IRS taxes any gain at long-term capital gain rates.

Got a great idea for a new business? It usually costs money to make money, so you’re likely to incur certain startup costs before the brainstorm starts producing a cash flow. Strategy: Make sure you’re open for business before the end of the year. That will entitle you to deduct your startup expenses on your 2011 return.

HR Law 101: Your employee handbook should include statements on these topics: a welcoming letter from the CEO, rules and procedures, your employment policies, compensation and benefits, safety and health rules, an affirmative action statement and an acknowledgment receipt form ...

The 12 members of the bipartisan “super panel” appointed by Congress are meeting to try to whittle down the national debt to a manageable level. And you can bet tax reform is on the table. Virtually every tax code provision is up for debate. What tax reform proposals can we expect to emerge from these closed-door meetings? Here are six:

Q.  To protect against a child’s spendthrift ways, my brother put his son’s home in our names (my wife and I). Can we deduct the property taxes?
For an individual, it may be preferable to be treated as an independent contractor, rather than an employee. You avoid income tax and employment tax withholding on payments and you can deduct related expenses on your Schedule C. But you have to be in business for yourself. Case in point:

It’s often difficult for young and middle-age taxpayers to come up with a down payment on a house. However, if you or your kids have your hearts set on a “dream home,” think outside the box: Consider an IRA as a secondary source of funds. Although IRAs are intended for retirement savings, tapping into your account might make sense if it helps to close the deal.

Employers often provide workers with the tools they need for their jobs or reimburse them for their out-of-pocket tool costs. As long as employers handle things correctly, tool-cost reimbursements are tax-free to employees and deductible by the employer. Strategy: Ensure that tool-cost reimbursements from your business are made via an “accountable plan.”

The damage caused by tornadoes, floods and other catastrophes this year should give taxpayers cause for concern. What if vital tax records are destroyed by an act of nature? Strategy: Take precautions before disaster strikes. Although tax records may be “reconstructed,” a better approach is to safe­guard them in a fire-resistant box or other ­secure location.

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