End of Year Tax Tips Abound

In addition to ushering in the holidays, the end of the year also ushers in a plethora of tax tips. Three articles that we found interesting are “Predictions for Expiring Small Business Tax Breaks” by Bill Bischoff, The Tax Guy at SmartMoney, “The Tax Mess Deepens” by the Wall Street Journal, and “More Year-End Tax Tips also by the Wall Street Journal.

Below are four tips from the above articles we believe are worth investigating.

Section 179 Deductions. According to Bill Bishoff, “For tax years beginning in 2011, eligible small and medium-sized businesses can immediately write off up to $500,000 of qualifying new and used assets—including most software, certain “heavy” vehicles, and equipment in general.”

100% First Year Bonus Depreciation. Bishoff also reports that “for calendar year 2011, business taxpayers can write off the entire cost of qualifying new (not used) assets—including most software, vehicles, and equipment in general.

Assets, for either the Section 179 deductions or first year bonus depreciation, must be placed in service by 12/31/2011 to be eligible, according to Bishoff.

Withholding. The Wall Street Journal recommends that if you received a big refund last year you might consider adjusting your withholding for the rest of the year. Kiplinger offers an easy to use withholding calculator at http://kiplinger.com/tools/withholding/

State sales-tax deduction. According to the Wall Street Journal article, “More Year-End Tax Tips”, the state sales tax deduction benefit ends at the end of 2011. According to the WSJ, the deduction “allows an itemized deduction for state sales taxes in lieu of state and local income taxes. The decision to take it is easy for residents of states without income taxes, such as Texas and Nevada. But it might also work for people in areas with low-income taxes who also had a large purchase such as a car, boat or engagement rings.

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