Posts Tagged "tax-deductable"

Hiring family can cut taxes

Posted on Jun 8, 2012

As a boss, you may hire family members and pay reasonable salaries for the work they do in your business. For example, you could hire your son or daughter to perform routine clerical or cleanup tasks. Your child’s salary would be a tax-deductible business expense, and your child’s income would be tax-free up to that year’s standard deduction amount for a single taxpayer ($5,950 for 2012). Wages in excess of that amount would be taxed at your child’s rates, which are probably lower than yours. You can compound the benefits of this strategy by having your child contribute to an IRA, which is likely to enjoy many years of tax-deferred growth. Wages paid to a spouse by a sole proprietor are subject to payroll taxes; those paid to your children who are under the age of 18 are not. Compensation paid has to be reasonable for the services...

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Don’t forget the paperwork

Posted on May 8, 2012

If spring cleaning has left you with items that you want to donate to charity, remember that donations of used clothing and household items must generally meet certain requirements to be tax-deductible. First, such items must be in “good used condition or better.” Second, a receipt from the charity is required. If the property is valued under $250 and a receipt is not available, such as at unattended drop-off locations, reliable written records are still...

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Who should take advantage of the IRA charitable rollover?

Posted on Oct 28, 2011

Last year’s tax law extended the “charitable IRA rollover” rule through the end of 2011. Taxpayers who are 70½ or older may make tax-free distributions of up to $100,000 directly to a charity from their IRA. The rollover fulfills the required minimum distribution (RMD) rule, and the rollover amount is not included in taxable income.  If you or someone in your family could qualify to make a charitable IRA rollover, should it be considered? Here are some of the situations in which this tax break could be beneficial.  * You have to take the RMD, but you don’t need the money and you don’t want to pay tax on the distribution.  * You want to give to charity, but you don’t itemize deductions so any contribution you make would not be tax-deductible.  * You do itemize deductions, but your charitable contribution deduction would be affected by the 50% / 30% of AGI limit.  * Having to include your RMD in income would result in the phasing out of other deductions and credits based on adjusted gross income.  The charitable IRA rollover is a powerful tool for tax planning. But remember, as it now stands, this provision will expire December 31, 2011. Give us a call if you would like to analyze whether this option makes tax sense for you or a family...

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