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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. Currently, we require each individual employee to fill out his or her own time sheet. But we’re considering a new format that lists all employees on one time sheet. Is this legal? Or should each employee’s time sheet be kept confidential?

The monumental new health care legislation imposes a new Medicare tax on investment income collected by high-income individuals. However, the new tax doesn’t kick in until 2013. Strategy: Plan ahead to reduce or avoid this extra tax. Conversely, if you wait a couple of years to make your moves, it may be too late. Here are five long-term ideas:

Q. Our company would like to hire interns to work in our office this fall, but we’re not sure if we have to pay them. What are some guidelines as to whether or not we need to put them on the payroll?
New legislation working its way through Congress could put a halt to a popular estate-planning technique. The crackdown limits the ability to avoid gift tax on transfers to a grantor annuity trust (GRAT). In particular, the proposed legislation no longer allows taxpayers to "zero out" a GRAT.
Do you own residential property that’s been producing a marginal profit or a loss the past few years? Short of raising the rent, you’re fighting an uphill battle as your expenses continue to grow each year. Surprisingly, many landlords don’t claim all the deductions they are entitled to. Here are the “top 10” deductions on the list:

The new HIRE Act preserves the enhanced Section 179 deduction of $250,000 for assets placed in service in tax years beginning in 2010. Without the tax law change, the maximum deduction was scheduled to fall to $134,000. Strategy: Load up on new business equipment this year. It may be your last shot at a $250,000 instant write-off for the near future.

If your firm is tagged as a “personal service corporation” (PSC), it must pay tax at a flat rate of 35% (the current highest average tax rate for C corps). You can’t benefit from the graduated rate structure like other corporations. As a result, your company might have to fork over thousands of extra tax dollars each year. That’s what happened to a land surveying firm in a new case.
Q. Our company pays monthly bonuses to hourly employees based on the previous month’s performance. When calculating overtime, should the bonus pay be included only for the weekly payroll that contains those bonuses, or does it change the overtime rate for other weekly pay periods as well?

Don’t expect the taxman to go easy on you in retirement. When you start collecting Social Security retirement benefits, up to 85% of the benefits may be taxable. Strategy: Be proactive about taxation of Social Security benefits. Depending on your situation, you can use one or more of four strategies to reduce or eliminate tax liability.

Are you tired of paying tax twice on income as a C corporation owner? First, income is taxed to the corporation as it is earned and then again to you personally when it is paid out as dividends. To avoid the double tax whammy, consider a switch to S corporation status. But watch out for the built-in gains (BIG) tax.

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