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 new HIRE Act provides a couple of key payroll tax breaks for employers that hire new employees. If your company hires a “qualified employee,” the business is exempt from the employer’s 6.2% Social Security tax portion of the FICA tax on the employee’s wages for the rest of 2010. Plus, the company is entitled to a new tax credit if it keeps the worker employed for at least 52 consecutive weeks.

Companies that use freelancers, consultants, per diems, long-term temps and other contingent workers are under assault. The federal government is poised to take a leading role in cracking down on employers it suspects of misclassifying employees as independent contractors. The feds aren’t alone ...

The IRS recently announced new depreciation limits for vehicles placed in service in 2010. (IRS Revenue Procedure 2010-18) The limits under the “luxury car rules” are comparable to the ones for 2009 except that you can no longer qualify for 50% bonus depreciation. Here’s a quick summary of the maximum depreciation deductions for 2010.
The Tax Court recently ruled in favor of a taxpayer who claimed approximately $5,000 in medical deductions for expenses relating to a sex-change operation. At trial, the Tax Court said the taxpayer’s hormone therapy and sex-reassignment surgery were incurred for the treatment of a disease. Therefore, these costs constituted tax-deductible medical expenses and were not cosmetic.
The IRS last month published the forms employers need to claim payroll tax breaks offered under the new HIRE Act. The forms include a new Form W-11 (HIRE Act Employee Affidavit) and a revised Form 941 (Employer’s Quarterly Federal Tax Return).
Have you heard about the latest crazy tax deductions? How about the cholesterol deduction ... the Willie Nelson write-off ... the time machine ... or the stripper who bared her assets? These tax tales are part of the fifth installment of Bankrate’s 10 craziest tax deductions, culled from the files of CPAs across the country. Don’t try these outrageous tactics at home!
Current and former drivers of Bimbo Bakeries USA who sued the company for allegedly breaking California’s meal and rest break laws are now offering to settle for $3.75 million. In the original action, drivers also charged Bimbo Bakeries with violating the Fair Labor Standards Act by failing to pay them overtime.

Here’s some good news if you use truly independent contractors to perform work. If you have done it right, you don’t have to worry about losing an age discrimination lawsuit. But there’s a caveat: You must make sure you can easily prove your contractor wasn’t really an employee.

Now that the massive health care law has finally been enacted, federal estate tax reform could be next. One interesting idea that has recently surfaced is to give estates a choice between observing the status quo (i.e., no estate tax in 2010) or the rules in effect in 2009.
The new health care law means new obligations for insurance companies, plus new responsibilities for employers. Here are the specifics:
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