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.

Q. My husband is on a special diet because of a medical condition. Can we deduct his food as a medical expense?

Q. What are my responsibilities as an employer for maintaining employees’ wage records?

These days, with employers having to do more with less, lots of companies outsource some functions that take a lot of time. If a vendor handles your payroll, make sure someone on the inside understands exactly how the outside provider calculates tricky things like overtime pay.

An Orange County attorney has agreed to plead guilty to two felony charges after frittering away millions of dollars of his clients’ settlement awards—by placing losing bets on the stock market. Sandeep Baweja, sole proprietor of Baweja Law Group, was representing 800 real estate agents who sued their employer for denying commissions and other payments.

Starting in February 2010, the IRS will begin to audit 6,000 randomly selected employers to give the agency a snapshot of employment tax compliance in the United States. The audits will stretch across all industries and company sizes, and will focus on employment tax issues ranging from payroll taxes to independent contractor status to executive compensation.

If your organization uses independent contractors, watch out: Starting in February, the IRS will begin intensive audits of 6,000 randomly selected employers. One key target: identify employers that are improperly misclassifying employees as independent contractors. If your company is selected for audit, follow good IRS examination management practices:

A family limited partnership (FLP) may be used to protect business interests from creditors. Assuming no ready market for the shares transferred to the FLP, the value can be discounted for estate and gift tax purposes. The IRS often challenges these discounts. In a new case, the IRS questioned the legitimacy of a transfer to a FLP shortly before the grantor’s death:

To concentrate single-mindedly on a single task, without diversion or distraction, keep asking yourself these questions:

The tax law contains a break for investing in qualified small business stock (QSBS). If certain requirements are met (e.g., the stock must be held five years), you can exclude (pay no tax on) up to 50% of the gain. The capital gains tax rate for QSBS is 28%, so the effective tax rate is 14% (50% of 28%). Now the new economic stimulus law has sweetened the deal.

HR Law 101: Under the Federal Unemployment Tax Act (FUTA) and state laws, employers are obligated to pay payroll taxes to provide unemployment compensation to employees who lose their jobs. By understanding how the system works, you may be able to cut your state tax rate through efficient claims control ...