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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If you have a flexible spending account (FSA) at work to pay for health care and/or dependent care expenses, remeber that any amount left over at the end of the year is forfeited, under the “use-it-or-lose-it” rule. Strategy: Squeeze every dollar out of your FSA before the year ends. You might even move up some nonemergency medical visits from 2010 to 2009.

Maybe you’ve acquired separate companies or you split off a subsidiary from your initial operation. In either event, you own two or more business entities on the books. Potential problem: If some of the employees work for more than one of the companies, you could be paying more employment tax than required. Strategy: Assign a “common paymaster” for payroll matters.

What will happen to the estate and gift-tax laws in the next few months? At this point, it’s anyone’s guess. So focus on what you know now. Emphasize those estate-planning techniques that would seem to make sense no matter which way the wind blows. For instance, if you’ve started a lifetime gift-giving program, continue it.

First, set aside the stereotype that the federal bureaucracy is inherently dysfunctional. Sure, it’s got plenty of faults. But Uncle Sam’s best-run agencies can actually teach private-sector employers a thing or two about HR. Here are eight lessons employers can learn from the biennial agency-by-agency ranking of federal employers:

The amount you transfer to a Section 529 plan for college savings on behalf of a beneficiary qualifies for the annual gift-tax exclusion. Strategy: Front-load your contributions to a Section 529 plan. The tax law allows you to give the equivalent of five years’ worth of contributions up front with no gift-tax consequences.

Your company may benefit from a special “bonus depreciation” deduction if it acquires business property this year. The bonus depreciation deduction is equal to 50% of the cost of qualified new (not used) assets placed in service in 2009. What’s more, you may be able to combine bonus depreciation with the Section 179 election.

When is your most diligent worker also your biggest lawsuit risk? Answer: When that nonexempt employee works through his or her lunch break or during other off-the-clock hours—a fact nobody realizes (or turns a blind eye to) until he or she sues for unpaid overtime.

Have you been setting aside funds in a Section 529 plan for your child’s college education? If your child has entered school, you can withdraw the funds tax-free to pay for qualified expenses. But you may be inclined to keep the account intact for a while longer so you can build up even more savings. Don’t do it.

Set aside any notions you might have that the federal bureaucracy is inherently dysfunctional. In fact, Uncle Sam’s best agencies have a thing or two to teach private-sector employers. Here are eight lessons employers can learn from the biennial agency-by-agency ranking of federal employers by the Partnership for Public Service and American University’s Institute for the Study of Public Policy Implementation.

Deductions for employee travel expenses are allowed if they are related to business activities. Strategy: Accelerate business trips planned for January into December. This enables you to write off the travel expenses in 2009 instead of waiting until 2010.