These are deduction strategies for your Business Taxes to assist you with achieving the biggest tax savings.

Tax Deduction Strategies #1
Section 179 depreciation: Tap into major tax savings

Tax law change in recent years is the huge increase in the Section 179 first-year depreciation allowance. A business can immediately deduct 100% of the cost of most new and used business personal property.


Tax Deduction Strategies  #2
Claim bonus depreciation for qualified assets

In addition to the enhanced Section 179 deduction, a business may claim “bonus depreciation” for qualified assets placed in service during the year. This tax break applies to:

Tax Deduction Strategies  #3
Section 179 depreciation: 4 ways to trigger quicker write-offs

1. Put the company in the black. The tax law limits your annual deduction to the amount of your taxable income. If your company typically zeroes out its taxable income through compensation payments, give yourself some leeway to claim the allowance.

2. Boost your business income limit. Don’t forget that your business income includes all income from businesses in which you actively participate. If you pull down a salary, either part time or full time, in addition to running a business, the extra income increases the amount of the allowance.

3. Maximize business percentage.  If you’re claiming the allowance for assets used partially for non-business reasons, maximize the business percentage. Suppose you buy a PC to work at home, but your kids also use it to instant-message their friends. If you use the computer 90% for business, you can deduct that percentage of the cost under Section 179. If the business use drops below 50%, you can’t claim the allowance.

4. Claiming allowance in the year placed in service.  You can claim the Section 179 allowance only for the year that equipment is “placed in service.” You get no deduction for 2013 if you buy a machine in 2013 but don’t take it out of the box until 2014.

Tax Deduction Strategies  #4
Section 179: Bigger deductions for ‘heavy’ SUVs

If you choose to deduct actual expenses rather than use the standard mileage allowance, you should be aware of a potentially huge tax advantage for owning “heavy” SUVs, vans and pickups. As long as these vehicles have a manufacturer’s gross vehicle weight rating (GVWR) above 6,000 pounds, they’re considered “trucks” for tax purposes.

When these “heavy” vehicles are used more than 50% for business, they can be depreciated much more rapidly than other passenger vehicles.

Tax Deduction Strategies  #5
Business vehicles: Fuel tax deductions for business driving

You can deduct auto expenses using a standard mileage rate, which the IRS sets each year. With the standard mileage rate, you don’t have to account for the actual expenses incurred. 


Tax Deduction Strategies  #6
Deductions for business vehicles: Tax-free cars for the family

The cost of operating and maintaining a car used for business purposes, including depreciation, is deductible. If you own a business, the firm can provide cars for the entire family.

As long as they’re employees who use the cars exclusively for business purposes, the company can deduct the entire cost of operating them. Deductible car expenses include the cost of gasoline, oil, repairs, insurance, depreciation, interest on loans used to purchase the car, taxes, licenses, garage rents, parking fees and tolls.


Tax Deduction Strategies  #7
Self-employed tax deductions: Write off home computer, furniture

Many self-employed taxpayers can deduct equipment purchases, rather than capitalizing them, under Section 179 of the tax code. The Section 179 deduction applies to most business assets, including home office computers and furniture.
For example, if you spend $25,000 on such items and they’re used strictly for business, you can take an immediate $25,000 deduction. If those items were used 60% for business, you can take a $15,000 deduction.


Tax Deduction Strategies  #8
Should you own or rent your business premises?

Once your company’s profits begin growing and your business stabilizes, you might want to consider owning your quarters rather than renting.
To evaluate the comparative costs, consider a reasonable length of time, such as 10 years. Include in your calculations the purchase price of a desirable building at the location you want. You can depreciate the cost of the building (“improvements”) but not the cost of the land. Add together the cost of financing 100% of your purchase price at the prevailing interest rate, maintenance costs, straight-line depreciation and property taxes. The total of these items is your “rent equivalent.”


Tax Deduction Strategies  #9
Shelter up to $25,000 per year in investment property

Real estate prices are down in many areas of the country, so some excellent buying opportunities are out there. In addition, investors still have some real estate tax shelters:

Directly owned real estate
From a house or condo that you rent out to a shopping center that you own with a few associates, you can find tax shelter in investment property. However, you must clear a row of obstacles before you can take deductions.

You must own at least 10% of the property, and you generally can’t own the property through a limited partnership interest. Also, you have to “actively manage” the property. That doesn’t mean you have to replace faulty fuses or switches. You can hire a property manager and a rental agent, but you must participate in management decisions, such as tenant selection and capital improvements, and must keep records to show your participation.
More obstacles relate to your income. Say your adjusted gross income is lower than $100,000 per year; you can deduct up to $25,000 worth of losses per year. However, if your AGI is more than $100,000, the allowable deduction declines to zero at $150,000.

Historic rehabs
You can earn a 10% tax credit for fixing up old buildings, 20% if the building is “historic.” The income limits here are less restrictive. As long as your AGI is below $200,000, you’re entitled to credits as great as a $25,000 “deduction equivalent.”


Tax Deduction Strategies #10
Rental property: Turn your child’s college lodging into a tax shelter

Let’s assume you have a child in college who wants to live off campus, and at the same time you could be looking to buy real estate to shelter your income. Strategy: Buy real estate property near the school, and rent a unit to your child. For your child, this provides reliable off-campus housing. For you, it’s a tax shelter that will probably appreciate in value. When you eventually sell the property, any long-term gain will be favorably taxed at the long-term capital gains rate. The maximum federal rate on gain attributable to depreciation deductions is 25%.


Tax Deduction Strategies #11
Self-employed tax deductions: your home office

Home office rules: the basics
Whether you’re a butcher, a baker or a candlestick maker, you can deduct your home office expenses if you use part of your home “regularly and exclusively” as either:

Tax Deduction Strategies #12
Can’t sell your home? Turn it into rental property

Strategy: Turn your home into a rental property. Hold it out for rent while you relocate. Then you can deduct a loss when you sell the place. This tax move takes advantage of a key distinction for investment or business property. 


Tax Deduction Strategies #13
Self-employed tax deductions on business travel

If the primary reason for the trip is business-related, a sole proprietor, partner or LLC member can write off 100% of the transportation costs within the United States.