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Tax Reduction Tips
In the rush to get tax returns prepared and filed by April 15th, many overpay their taxes. Following are a few tax reduction tips that could help you save a bundle.
Tax Credit For Starting A Small Business Pension Plan
Establishing a pension plan can help you retain important employees. What many business owners don't realize is a tax credit can be claimed if the business has 100 or fewer employees. Meet this requirement and you can take a tax credit of up to $500 in each of the first three years of the plan. Tax credits are extremely valuable because they are deducted directly from the taxes you owe, not gross revenues.
The credit is 50% of certain start up costs you incur in each of the first three years. The costs include the expenses incurred in establishing and maintaining the plan. They also include the cost of any educational retirement planning programs you provide for employees.
For example, first assume that you spent $1,500 starting a pension plan for your employees in 2004. Next assume that you will spend $1,200 in both 2005 and 2006 for maintaining the program and educating your employees. In this scenario, you would be eligible to claim a tax credit of $500 in 2004, 2005 and 2006.
Personal Loans To Business
Many business owners lose track of loans they make to their business. As a result, they incorrectly classify the proceeds of the loan as part of their gross revenues. This artificially raises the gross revenues of the business and adds to the tax liability. Closely review your records for 2004 to make sure you are not making this mistake. Pay particular attention to charges on personal credit cards. You will be surprised how quickly the numbers add up.
SUV Deduction Wounded, But Still Alive
Much has been made about the "SUV Tax Deduction" that allowed purchasers of SUVs over 6,000 pounds to immediately deduct up to $100,000 of the cost. Many mistakenly believe that the American Jobs Creation Act of 2004 eliminated this deduction. It did not. Instead, it reduced the deduction to $25,000 with the remaining amount allocated to depreciation. This is still a significant immediate deduction. If you purchased a non-SUV truck that weighed over 6,000 pounds in 2004, you are not restricted to a "mere" $25,000 deduction.
Tsunami Relief Contributions Paid in 2005
Millions of Americans contributed to charitable organizations providing relief to Tsunami victims. Typically, charitable contributions are deducted in the year they are made. New legislation, however, allows you to deduct Tsunami contributions you made in January 2005 on your 2004 tax returns. Alternatively, you can wait and deduct the donation on 2005 returns. Unfortunately, you cannot deduct the contribution on both!
Sales Tax Deduction
If you itemize deductions, you have a choice of deducting your state and local income taxes OR your state and local sales tax. This option is available for the 2004 and 2005 tax years. If you live in a state that does not collect income tax, the optional sales tax deduction should be claimed for significant tax savings. See IRS Publication 600 for more information.
Deduction for Discrimination Lawsuit Costs
If you were required to pay attorney's fees and court costs associated with a discrimination lawsuit, you may be able to claim a tax deduction. The deduction is available only for costs and fees incurred after October 22, 2004 in relation to a judgment and settlement. The deduction is not limited by the alternative minimum tax. Realistically, this deduction will be more viable for the 2005 tax year, but a few taxpayers may be eligible this year.
There are numerous deductions and credits available if you take the time to look for them. Taxes can be confusing, but the savings justify the time and effort of finding all available deductions and credits.
Richard Chapo is CEO of http://www.businesstaxrecovery.com - Obtaining tax refunds for small businesses by finding overlooked tax deductions and credits through a free tax return review.
Taxes - Google News
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Some Folks Pay A Lot Less Tax Than Others On Very Same Income-Did You Pay Too Much Tax In 2004?
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IRS Offer-in-Compromise, Hype or Hope?
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Small Businesses Filing Amended Federal Tax Returns to Recover Money
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Where to Find Tax Breaks for Your Home Based Business
April 15th looms in front of most people every year like a big, full moon full influencing a tax based frenzy, but knowing where to find tax breaks for your home based business can make that frenzy a little less frantic and more beneficial to you and your home based business. Finding tax breaks for your home based business is not overly difficult, but make sure you discuss tax breaks for your home based business with the person doing your taxes.
Section 179 - Tax Relief From Depreciation Rules
"Depreciation." For business owners, this word is the one most likely to inspire headaches and fits of cussing.
Tax Tips - Which Tax Form Is Right For Me?
IRS Tax forms can be confusing.Am I a 1099 or a W-2.
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We all love to criticize the IRS, don't we? And I'mjust as guilty as anyone. It's easy to ridicule a hugeorganization of government bureaucrats who often seemto be Public Enemy #1.
Understanding Marketing Tax Deductions
Marketing is a necessary expense in running practically any business and the IRS acknowledges as much. You may run advertisements on or in the Internet, radio, television, magazines, newspapers and other media to sell your products or services.
The means and types of businesses have transformed with advent of era of e-commerce, resulting in global seller and buyer. The Internet offers consumer choice, business efficiency and recreation.
State Tax Information
All states also have their own tax system. Typically there is a tax on real estate, and there may be additional income taxes, sales taxes, and excise taxes.
How to Check the Status of Your Tax Refund Online
So, you were pleasantly surprised to learn that you are getting a refund on your taxes. Congratulations! The question for most taxpayers expecting a return is, "Where is my refund?"Check Your Refund Status OnlineThe easiest way to check on your refund is to ask the IRS through IRS.
Amending Procedural Laws for Collection of E-taxation
The electronic transaction ordinance defines the certificated copies in which are to be presented for adjudication. Where any law requires or permits the production of certified copies of any records, such requirement or permission shall extend to print outs or other forms of display of electronic documents where, in addition to fulfillment of the requirements as may be specified in such law relating to certification, it is verified in the manner laid down by the appropriate authority.
Tax Records - What You Should Keep And For How Long
Many taxpayers are confused about how long they should keep tax records. The term "tax records" refers to your tax returns and the documents that support the information in the returns.
Fraudulent Tax Shelters - KMPG Goes Down Hard
In the largest criminal tax case ever filed, KMPG has copped a plea to using fraudulent tax shelters to bilk the government out of 2.5 billion dollars.
Insider Guides to IRS Audits!
Ever wish that, as a business owner, you knew exactly what would raise "red flags" at the IRS? Or how to make an IRS audit go as smoothly and painlessly as possible?If you're in the right type of business, you can get that information, directly from the IRS!Traditionally, IRS examiners have been responsible for auditing many types of businesses. An examiner might audit a grocery store one week and a construction company the next.
What is a Federal Tax Lien?
A Federal Tax Lien (FTL) is a legal instrument that secures the claim of the United States in the right, title, and interest of a debtor taxpayer's assets. It is a public document and is recorded at the County Clerk's office or the Secretary of State, depending on local law.
Tax Trap #3 -- IRS Penalties, Interest and Love Letters
As a small business owner or self-employed person,one of the easiest ways to keep Uncle Sam off your backand out of your life is to file your forms, payments andother paperwork on time.Over the next four months there are several key datesthat you dare not forget! Here they are -- all in one place,along with links to the IRS website PDF file for thatparticular form, where appropriate.
Send Your Kids To Summer Camp and Write It Off
If you paid someone to care for a child so you could work, you may be able claim a tax credit for child and dependent care expenses on your federal income tax return. This credit is available to people who, in order to work or to look for work, have to pay for child care services for dependents under age 13.
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