By month: October 2011
If you want to operate your business as an S corporation, you need to recognize that the S corporation is a separate legal entity and that you are an employee agent of that corporation. You also need to ensure that the S corporation is the earner of the income. You may not assign your income to your corporation.
Your business ownership creates an opportunity for a tax plan that can give you tax deductions for hiring your children and can give your children tax-free income. But your tax plan does not stop there. Your children might start Roth IRAs where they can invest their tax-free income in a college fund. Done right, as described in this article, the government pays you for your help with this plan.
Does your chart of accounts contain two categories for your business entertainment tax deductions? It should. Your tax deduction for an employee party goes into a different deduction category from your regular business entertainment. Learn about the two accounts and how to get more tax deductions when you party with your employees.
Stay with your mom and dad on a business trip, and create tax deductions by paying them for business lodging. You have a choice: deduct the cost of staying at the big hotel downtown or deduct the cost of staying with your parents. Either way, the choice of location does not change the fact that you are on a tax-deductible business trip.
Are you subject to the self-employment tax if your activity does not rise to the level of a trade or business? Answer: no. When not subject, you report the non-business income on page 1 of your Form 1040 where the self-employment tax does not apply. That’s good for the income. The deductions for this non-business activity have to take another route, and the deductions don’t fare very well.
Tax law requires your attention to enable tax deductions on your business vehicles. Your tax write-off results differ with certain aspects: vehicle type (car, van, pickup truck, crossover vehicle), new or used, use of Section 179 expensing, and bonus depreciation. This article guides you through the deductions so you can select what gives you the best write-offs.