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Have a jolly season when unwrapping 7 new tax ‘presents’

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in Small Business Tax,Small Business Tax Deduction Strategies

The Emergency Economic Stabilization Act of 2008, the “bailout law,” extends a variety of tax breaks that had expired after 2007. Generally, the extensions continue through 2009. Here’s how you can take advantage of the tax goodies under the tree this year.

1. Pay next semester’s tuition. The bailout law restores the above-the-line deduction for qualified higher education expenses. The maximum deduction is $4,000 for joint filers with an AGI of $130,000 or less ($65,000 for single filers). But the deduction is cut in half to $2,000 for higher-income taxpayers until it disappears completely for an AGI above $160,000 ($80,000 for single filers). Typically, the next tuition bill for a child in college is due next month.

Strategy: Make the payment before Jan. 1. Then you can claim the tuition deduction on your ’08 tax return. This may be worthwhile if you prepaid the tuition due in January 2008 in December 2007. Reason: Y...(register to read more)

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