DEDUCTING WEBSITE EXPENSES If you’re having trouble deciding how to categorize your company’s website costs for tax purposes, you’re not alone. The IRS hasn’t given official guidance on deducting website expenses yet, so you can apply the guidance they currently have on other business costs to your website. Website Equipment The hardware that you need to create and maintain a website falls under depreciable equipment. If these assets are placed … Read more
The Section 199 deduction is intended to encourage domestic manufacturing. In fact, it’s often referred to as the manufacturers’ deduction. But this potentially valuable tax break can be used by many other types of businesses besides manufacturing companies. Sec. 199 deduction 101 The Sec. 199 deduction, also called the “domestic production activities deduction,” is 9% of the lesser of qualified production activities income or taxable income. The deduction is also … Read more
The break allowing taxpayers to take an itemized deduction for state and local sales taxes in lieu of state and local income taxes was made “permanent” a little over a year ago. This break can be valuable to those residing in states with no or low income taxes or who purchase major items, such as a car or boat. Your 2016 tax return How do you determine whether you can … Read more
There are many ways to save for a child’s or grandchild’s education. But one has annual contribution limits, and if you don’t make a 2016 contribution by December 31, the opportunity will be lost forever. We’re talking about Coverdell Education Savings Accounts (ESAs). How ESAs work With an ESA, you contribute money now that the beneficiary can use later to pay qualified education expenses: Although contributions aren’t deductible, plan assets … Read more
You may be aware of the rule that allows businesses to deduct bonuses employees have earned during a tax year if the bonuses are paid within 2½ months after the end of that year (by March 15 for a calendar-year company). But this favorable tax treatment isn’t always available. For one thing, only accrual-basis taxpayers can take advantage of the 2½ month rule — cash-basis taxpayers must deduct bonuses in … Read more
IRS had announced annual inflation adjustments for more than 50 tax provisions for tax year 2017, following are items of greatest interest to most taxpayers: Standard deduction for married filing jointly rises to $12,700 for tax year 2017, up $100 from the prior year. For single taxpayers and married individuals filing separately, the standard deduction rises to $6,350 in 2017, up from $6,300 in 2016, and for heads of … Read more
Many tax breaks are reduced or eliminated for higher-income taxpayers. Two of particular note are the itemized deduction reduction and the personal exemption phaseout. Income thresholds If your adjusted gross income (AGI) exceeds the applicable threshold, most of your itemized deductions will be reduced by 3% of the AGI amount that exceeds the threshold (not to exceed 80% of otherwise allowable deductions). For 2016, the thresholds are $259,400 (single), $285,350 … Read more
If you have incomplete or missing records and get audited by the IRS, your business will likely lose out on valuable deductions. Here are two recent U.S. Tax Court cases that help illustrate the rules for documenting deductions. Case 1: Insufficient records In the first case, the court found that a taxpayer with a consulting business provided no proof to substantiate more than $52,000 in advertising expenses and $12,000 in … Read more
If you recently redeemed frequent flyer miles to treat the family to a fun summer vacation or to take your spouse on a romantic getaway, you might assume that there are no tax implications involved. And you’re probably right — but there is a chance your miles could be taxable. Usually tax free As a general rule, miles awarded by airlines for flying with them are considered nontaxable rebates, as … Read more
