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Small Business Tax

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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Employers often provide workers with the tools they need for their jobs or reimburse them for their out-of-pocket tool costs. As long as employers handle things correctly, tool-cost reimbursements are tax-free to employees and deductible by the employer. Strategy: Ensure that tool-cost reimbursements from your business are made via an “accountable plan.”

The damage caused by tornadoes, floods and other catastrophes this year should give taxpayers cause for concern. What if vital tax records are destroyed by an act of nature? Strategy: Take precautions before disaster strikes. Although tax records may be “reconstructed,” a better approach is to safe­guard them in a fire-resistant box or other ­secure location.

At long last, the IRS has issued guidance on a special election for estates of individuals who died in 2010.
If you’re getting a divorce, there’s more on your mind than taxes. Still, if you make a few tax-smart moves before the decree is finalized, you can save big bucks down the road. Here are four tips:

Is converting a traditional IRA to a Roth this year a good idea? It de­­pends on the situation. Weigh the pros and cons. Although taxpayers no longer can benefit from a special tax break for conversions in 2010, converting to a Roth still might be a smart tax move. Of course, the conversion is subject to current income tax.

Q. Can I get a tax deduction for buying one of the new plug-in vehicles?
The IRS has released an updated list of 275,000 organizations that have lost their tax exemption because they haven’t filed tax returns for at least three years. It believes that most of the organizations are now defunct. Nevertheless, the IRS has provided procedures allowing these charities to obtain reinstatement.
Now that Congress has finally approved a debt ceiling agreement, you can expect another issue to gridlock both chambers now: tax reform.

The IRS is giving some taxpayers extra time to “come clean” about foreign bank accounts. In new guidelines posted on its web site, the IRS has said it will postpone for up to 90 days the deadline for participating in its offshore voluntary disclosure program. The initial deadline was Aug. 31, 2011.

Undoubtedly, the deduction for charitable donations is one of the biggest write-offs on your personal tax return. That’s why the IRS continues to scrutinize deductions claimed by high-­income taxpayers. Strategy: Stick to the strict letter of the law. Be aware that recent tax law changes impose tough substantiation rules on cash and cash-equivalent donations.

In a relatively quiet move reported in The Wall Street Journal, the IRS is now requiring companies being audited to turn over exact copies of the electronic records kept in their business software programs. Small business groups have begun to fight back against this practice.

The IRS is making it easier for tax return filers to qualify as an “innocent spouse.” In a new ruling, the agency eliminates a strict timing requirement under prior law. And it says that other taxpayer-friendly changes are on the way.

Should you invest in the stock of your own company through your 401(k) or other retirement plan? It makes perfect sense because you’re effectively betting on yourself. To sweeten the deal, you might be able to buy the stock at a substantial discount. Best of all, you may be in line for a future tax bonanza.

Q. I remember reading that serial LLC filings are not permitted by the IRS. Are there any new developments?

Don’t forget about a special tax credit for small businesses buried in the massive health care legislation passed in 2010. Determine if your small business qualifies for the credit. The credit can offset part of the cost of providing health insurance to your staff.

Q. Do we have to deduct $500 from our casualty loss deduction in a disaster area?
Question: My company provides group-term life insurance with a value of more than $50,000 to some retirees. I know I have to report the uncollected employee FICA taxes on their W-2s in Box 12 with Codes M and N. Do we have to pay the employer share of these taxes? If so, when are they due? Also, how are the amounts reported on Form 941?
Q. I have power of attorney over my mother’s affairs. Can I arrange a gift to myself to avoid estate tax?
Under the annual gift tax exclusion, you can bestow gifts of up to $13,000 per recipient in 2011, with no gift tax due. You don’t even have to file a gift tax return. But you must file the federal gift tax return, Form 709, if you elect the exclusion for joint gifts.

It won’t be long before the kids start heading back to school. How about you? Maybe you’ve decided to take a refresher course in your specialty at a local college. Or you could be thinking about shifting gears and starting a new career path. In some cases, you can deduct your business education expenses; in others, you can’t.

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