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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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The federal estate tax law remains in flux. But with Congress seemingly unable to resolve the matter anytime soon, the current law repealing the estate tax for 2010 remains in effect. If you’ve been left in a quandary about estate planning, you’re certainly not alone. Nevertheless, you could make several logical moves this year.

These are tough times, and sometimes businesses run short on cash. Or a banking mistake may result in fees that cause other checks to bounce. If that happens to payroll checks, make every effort to fix the problem as soon as possible. Not only are employees entitled to their pay, some have resorted to suing their employers for bouncing paychecks.

California is a great state—for employees who want to sue their employers. Even the wage statements employees get with their paychecks can lead to lawsuits. Advice: Have your attorney take a look at those pay stubs to make sure they comply with California wage-and-hour laws.

Hilary Koprowski, the Polish-born developer of the precursor to Albert Sabin’s oral polio vaccine, has sued Philadelphia’s Thomas Jefferson University Hospital after it shut down his research lab. The hospital claims Koprowski’s lab doesn’t bring in enough grant money to fund its operation.

Are you ready for a computer upgrade? Don’t trash the old one if it no longer meets your needs. Besides helping to save the environment, you can save taxes to boot. Strategy: Donate the PC to a charity. Usually, you can deduct the full fair market value of the computer. Therefore, you can seize a tax deduction for property you were going to discard.

Since the beginning of the year, financial experts have been beating the drums for Roth IRA conversions. And this tax strategy still makes sense for many taxpayers. But you may find, upon closer review, you would be better off if you had left things alone. Are you completely out of luck? Not necessarily. You can convert your Roth back into a traditional IRA if you choose. It’s like it never happened.

Q. Our small company is rehiring a couple of workers we laid off. Can we claim the HIRE Act payroll tax exemption for these employees?

Under Section 179, you can currently deduct up to $250,000 of assets placed in service in 2010. But not every business can benefit. You may have to write off assets over the regular depreciation period. Strategy: Time equipment purchases to suit your needs. Usually, you’ll fare better tax-wise by placing assets into service before Oct. 1. But, surprisingly, you might maximize your deductions after the Sept. 30 deadline.

Work is usually a “family affair” for small business owners. Typically, your spouse will pitch in whenever and wherever help is needed. Strategy: Officially put your spouse on the company payroll. If you employ a previously unemployed spouse, your company may be eligible for the new HIRE Act tax breaks. But even if you don’t qualify for the HIRE breaks, there are at least six potential tax benefits for the taking.

If you’re the sole owner of an S corporation, you call the shots. So you can set the salary figures for all employees, including yourself, as long as you stay within the law’s boundaries. Strategy: Keep your annual salary on the low side. At year’s end, you can pay yourself dividends out of profits. Why would you skimp on your own salary? You avoid employment taxes on cash distributions from your company.

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