Income Tax Deductions

Tax Deductions for Home Businesses

Executive Summary About Tax Deductiopns for Home Business By Connie Nies

For most home business owners, tax deductions may be the key that can help put a little extra cash back into their pocket. Tax deductions vary from business to business but it is worth your time to familiarize yourself with some of these common tax deductions.

First, determine if you qualify for a home business tax deduction. In reality, tax deductions can apply to a variety of places. Your home office can be a garage, basement, or a studio. It will make tax time a much less stressful experience for the home business owner. Any item that is purchased for your home business is usually considered a tax deduction. Home business deductions can be separated into two categories. Direct expenses include office furniture, decorating costs, or equipment. Indirect Expenses are the expenses that must be paid the entire house. You can deduct the percentage of your business expenses from your utility costs.

Another tax deduction to consider is telephone expenses. An overlooked tax deduction for some home business owners are the meal expenses when they entertain an employee, a customer, or a client. Save all your receipts from these business dinners. Most home business owners use a vehicle as a means of transportation for their business. Vehicles can be vital to run your home business, and overtime these kinds of charges can hurt your profits. Airline fare can be another costly, but necessary aspect for home business owners. The IRS does allow your trip expense as another tax deduction.

As you can see, home business owners have a variety of options when it comes to tax deductions. Remember to keep records of all your home business activities and consult with a tax advisor to get the best deductions for your home business

Business Tax Deduction Tips

Tax deductions contribute to national prosperity by providing capital to business. Tax deductions reduce taxable income. A $100,000 tax deduction reduces federal income tax by $35,000 ($100,000 X 35%) assuming a 35% income rate. Options for increasing business tax deductions include revising depreciation schedules, reviewing fixed asset listings, casualty losses, bad debts, and charitable contributions.

Real estate depreciation offers substantial opportunity for increasing tax deductions. Most depreciation schedules are established by simply separating land and long-life improvements. Short life items can be depreciated over 5, 7, or 15 years. There are about 130 short-life items that have been determined by legislation, tax court decisions and IRS rulings. A cost segregation study precisely values up to 130 components of real estate that can be valued as short-life property.

By obtaining a cost segregation study, it is possible to obtain a windfall of tax deductions by “catching-up” previously under-reported depreciation. This one-time “catch-up” can occur in the first tax return filed after the cost segregation study is performed without filing any amended tax returns.

Reviewing fixed asset listings (of business personal property) can generate a meaningful amount of tax deductions. Section 179 allows business to use up to $108,000 of 2006 capital expenditures as tax deductions. Confirm you are not capitalizing assets that could be claimed as a tax deduction.

Casualty losses also offer opportunity for tax deductions. For a casualty loss, you can deduct: 1) the market value immediately before the casualty less 2) the market value immediately after the casualty less the amount covered by insurance. You reduce taxes in several ways when making charitable contributions. You can donate the land to a qualified charitable organization and take a tax deduction for $1,000,000.

Tax deductions sometimes seem arcane and complicated.

Cost segregation produces tax deductions and reduces federal income taxes across the country and in every size market. Below are just a few examples of cities where cost segregation generates meaningful tax deductions.

Business Tax Deduction Tips

Executive Summary About Business Tax Deduction Tips By Patrick C Oconnor

Tax deductions contribute to national prosperity by providing capital to business. Tax deductions reduce taxable income. A $100,000 tax deduction reduces federal income tax by $35,000 ($100,000 X 35%) assuming a 35% income rate. Options for increasing business tax deductions include revising depreciation schedules, reviewing fixed asset listings, casualty losses, bad debts, and charitable contributions.

Real estate depreciation offers substantial opportunity for increasing tax deductions. Most depreciation schedules are established by simply separating land and long-life improvements. This simple approach is lawful but sharply understates lawful depreciation. About 20-40% of improvements for most properties are short-life items. Short life items can be depreciated over 5, 7, or 15 years. There are about 130 short-life items that have been determined by legislation, tax court decisions and IRS rulings.

Real estate depreciation can typically be increased by 50-100% for the first 5-7 years of ownership by obtaining a cost segregation study. A cost segregation study precisely values up to 130 components of real estate that can be valued as short-life property.

By obtaining a cost segregation study, it is possible to obtain a windfall of tax deductions by “catching-up” previously under-reported depreciation. This one-time “catch-up” can occur in the first tax return filed after the cost segregation study is performed without filing any amended tax returns.

Reviewing fixed asset listings (of business personal property) can generate a meaningful amount of tax deductions. They often include items that should have been expensed, which have been sold or thrown away or which have an excessive depreciation life. Items that should have been expensed include operating expenses (sometimes included by error) and maintenance or repairs (which was necessary but did not increase the life of the assets or component.) Section 179 allows business to use up to $108,000 of 2006 capital expenditures as tax deductions. Confirm you are not capitalizing assets that could be claimed as a tax deduction.

Casualty losses also offer opportunity for tax deductions. For a casualty loss, you can deduct: 1) the market value immediately before the casualty less 2) the market value immediately after the casualty less the amount covered by insurance. The portion that is not intuitive is: the market value after the casualty is much less than the value before plus the cost to renovate. Other factors which can and should be considered for tax deductions are: lost rent/usage, stigma (in some cases), construction management, construction risks, and entrepreneurial effort.

Bad debts are a subjective matter. Judgment is required to accurately estimate the amount that should be claimed as a tax deduction. If bad debts have not been examined carefully for several years, they may offer a meaningful tax deduction opportunity. (This applies to companies who utilize accrual accounting. Companies who use cash accounting can’t claim a tax deduction for bad debt since they never recognized the revenue.)

Do well by doing good. You reduce taxes in several ways when making charitable contributions. For example, you purchased land 10 years ago for $200,000, and it is now worth $1,000,000. However, you now realize you will never use the land for the intended purpose. You can donate the land to a qualified charitable organization and take a tax deduction for $1,000,000. However, you do not have to pay capital gains taxes on the appreciation.

Tax deductions sometimes seem arcane and complicated. However, a knowledgeable team of advisors from several fields can reduce your federal income taxes. The complexity of the tax code makes it difficult for any one personal to be knowledgeable in all areas.

Cost segregation produces tax deductions and reduces federal income taxes across the country and in every size market. Below are just a few examples of cities where cost segregation generates meaningful tax deductions.

City:

• New York, NY
• Houston, TX
• Hartford, CT
• Las Vegas, NV
• Memphis, TN
• Philadelphia, PA
• Orlando, FL
• Phoenix, AZ
• Atlanta, GA
• Bridgeport, CT
• Worcester, MA
• Akron, OH
• Harrisburg, PA
• Salt Lake City, UT
• St. Louis, MO
• Portland, OR
• Scranton, PA
• Greenville, SC
• Bakersfield, CA
• Madison, WI
• Chicago, IL
• Fresno, CA
• Riverside, CA
• Albany, NY
• Indianapolis, IN
• Birmingham, AL
• Ft. Lauderdale, FL
• Baton Rouge, LA
• Augusta, GA
• Honolulu, HI

Cost segregation produces tax deductions for virtually all property types, including the following:

Property Type:

• Medical facility
• Shopping mall
• Restaurant
• Country club
• Fast food restaurant
• Power center
• Hotel
• Car wash facility
• Convenience store
• Health spa

Almost every industry, including the following, can generate cost-efficient tax deductions by using cost segregation.

Industry:

• Golf courses and country clubs
• Transportation equipment manufacturing
• Electrical component manufacturing
• Real estate lesser
• Apparel manufacturing
• Wood product manufacturing
• Plastic and rubber products manufacturing
• Furniture stores
• Beverage and tobacco product manufacturing
• Building supply dealers

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