If you are running your own business, you may deduct a part of the cost of your meals and entertainment. Entertainment Expenses – Are They Tax Deductible? Entertainment for business purposes may include in general, any activities that provide recreation, amusement and entertainment. Any expenses for food, hotel, transportation, or for entertaining guests (business clients or potential business clients) at social clubs, sporting events, theaters and at other similar locations are tax deductible. Meals And Entertainment Tax Deduction Documentation In order to be eligible for this tax deduction, you have to show evidence of your expenditures, including receipts, and other support for your business related expenditures. To deduct an entertainment related meal or any other expenses for gifts, entertainment, travel, etc, you must prove evidence of an expenditure receipt of $75 or more. You cannot claim the cost of those expenses twice on your tax return. You may choose to report them as travel expenses or claim them under the entertainment expense category. When claiming your business expenses, you need to make sure you have receipts or other documentary evidence, including the name of any restaurant, the amount spent and the date. You need to specify the relationship with your guest, mentioning the possibility of engaging them in the active conduct of your business. Which Business Expenses Are 100% Deductible? Business transportation expenses are 100% tax deductible. Qualified business expenses including meals, tickets for events where business is discussed, are 50% tax deductible. There are certain meals and entertainment expenses fully deductible. Those include: Expenses for goods, such as customer samples or promotional offers for to the public. Expenses for goods, services that are treated as wages to the recipients. Expenses reimbursed under an accountable plan. Expenses provided by your employer, for recreational and social activities. Expenses for foods and ...Continue Reading

You can give an amount not to exceed $13,000 to each one of your children, up to $52,000 per family without filing a gift tax return. You must file Form 709, if the amount allocated for gifts exceeds $52,000. If you intend to make investments for your child, you may use a Section 529 plan. If your child uses the money for qualified college expenses, all income earned may become tax-free. In addition, 20% of the money your child held in his name is considered to cover his tuition fees. Investment Strategies - Invest In Growth Stock You can give your child growth stocks or growth stock mutual funds, from companies that invest their profits for future growth. The child will pay no tax currently, as the companies are paying little or no current dividends. Municipal Bonds Are Tax Free You can also buy a municipal bond for your child that matures after the child’s 19th birthday. The interest is not subject to federal income tax. Employ Your Children You may be able to employ your children and pay them for the work they perform. The standard deduction for a child or a dependent is the greater of $950 of unearned income or the sum of $300 plus any earned income. In this way, your business qualifies for a tax deduction at its tax rate and the amount paid to your child will be taxed at the child’s tax bracket. Less Taxable Income By Investing In Tax Managed Mutual Funds You may choose to invest in tax-managed mutual funds. These funds usually generate minimal taxable income. Invest In U.S. Saving Bonds You may give U.S. Saving Bonds to your child. You do not have to pay taxes on bond interest until the child is no longer subject to kiddie tax. Then, ...Continue Reading

Business Gifts Expenses – Details On How To Claim These As Deductions On Your Tax Return! If you offer gifts to persons that may become business clients or business associates, you can claim a tax deduction for these business expenses. You may be entitled to claim a part or all the cost of your business gift expenses. The IRS allows deductions for gifts, only if you show evidence of your business gift expenditures. When claiming these expense deductions, you need to provide information regarding the recipient’s name, occupation, and other relevant information. You need to mention the reason you give the gift, too. Income Tax Deductions For Gifts The maximum amount deductible for each business gift you give to each individual considered business related is $25. There are certain items intended to serve as gifts, but they do not qualify for a $25 deduction: An item that costs $4 or less with your name clearly and permanently imprinted on the gift or one of the identical items, distributed by your business. Signs or other promotional material used for business advertising purposes. Employee Awards. When filing your taxes, if you consider including business expense deductions you may qualify for great tax savings.

Another effective way of shifting income from a high-bracket taxpayer to a low bracket taxpayer is to transfer assets or property to your family members or dependents. Family Trusts Advantages The advantage of this type of investment income shelter is that the amount of income you move in your family members’ name (distributed from the trust) is taxable at their low tax rate. The family trust represents a great tax benefit for parents with disabled children. If the distributions are made to other than family members, or to dependents who do not qualify for lower tax rates on their income earned on the investments, the higher marginal tax rate will apply to that income.

Family Limited Partnership Explained And How It May Apply To You. Despite the Tax Reform Act of 1986 enactment concerning the taxpayers’ investment income tax shelters, you may still find an alternative way of shifting your income to your lower bracket family members. Family Limited Partnership Asset Protection The Family Limited Partnership allows you to transfer a significant amount of income to your dependents. As an individual business owner, you may be giving or selling interest, to your family members, considered limited partners. Thus, you remain in control of your money and this will help you reduce your income taxes. Family Limited Partnership Agreement According to the family limited partnership agreement, the children need to pay income taxes on any capital gain from investments in the partnership. The parents will still have the right to control these assets and decide the timing of distributions from this family partnership.

Clifford Trusts – Temporary Trusts To Shift Taxable Income In the past, Clifford trusts represented a popular way of shifting income from parents to their children. The amount of income transferred was being taxable at their children’s lower rates. This type of trust was established for a period of 10 years or more. You Can Not Shelter Any Investment Income Using Clifford Trusts Beginning with January 1, 1987, the use of Clifford trusts has been eliminated.

Business Travel Expenses Deductions – Know What You’re Doing To Stay Out Of Trouble. If you travel for business purposes, you are entitled to claim travel expenses deductions. The IRS allows you to claim any ordinary and necessary expenses incurred while you are away from home, attending a business meeting. Travel business expenses are 100% deductible. However, you can deduct only 50% of the cost of your meals. In order to be eligible for this tax deduction, you must keep track of all your expenditures and save your receipts for an eventual IRS audit. Travel Expenses – Deductions For Your Spouse, Dependent Or A Business Associate If your spouse or your dependent travels with you, you cannot deduct travel expenses for her, your dependent, or another person, unless the person you claim the deduction for: Is your employee. Has a bone fide purpose for the travel. Would otherwise be allowed to claim the travel expenses deduction. If you have a business associate who is actively involved in the conduct of your business, you may be able to claim a tax deduction for their travel expenses. Expenses Deductions For Travel In The United States The deduction of your travel expenses depends on your primarily purpose of traveling. If the main purpose of your trip is primarily for business, you are entitled to claim travel expense deductions only for related business expenses. If you plan your trip mainly for personal reasons and in addition to these, for example, you plan to attend a convention or a business meeting, your travel expenses are non-deductible. However, the expenses incurred during the business meeting may be deductible. You must have acceptable evidence of your business related expenditures. Expense Deductions For A Trip Outside The United States If you go on a business trip outside the ...Continue Reading

If you own a business, you may receive a tax deduction for advertising expenses. Tax Deduction For Advertising – Allowable Expenses You may deduct under business expenses: The cost for promotion activities, sponsoring local events, special events,etc. The cost of institutional and goodwill advertising. For example, the IRS allows you to deduct the cost of advertising for buying U.S. Saving Bonds. Any other reasonable tax deduction for advertising expenses may be accepted, depending on the specific circumstances of your business.

Transportation Expenses For Medical Care Can Be Deducted, Learn How. The transportation expenses necessary to your medical care can be deducted if the care qualifies as medical expenses. You May Deduct Transportation Costs You can deduct the amounts paid for taxi, train, bus, or plane fare, even the ambulance fees. If you use your car, you may deduct the out of pocket expenses for medical care purpose such as oil and gas. You may also take a per mile allowance instead of actual transportation expenses for medical care. Others transportation expenses for medical care may be tax deductible, under certain circumstances.

You may be able to deduct some of your transportation expenses. These expenses include the cost of transportation by bus, rail, taxi, air, etc. The cost of maintaining your car is included in these expenses too. Transportation Expenses As Tax Deductions According to the IRS, transportation expenses include the cost of the following: Traveling from your workplace, during work hours, for business purposes, within the city or general area that is your tax home. Traveling to visit clients or customers. Attending a business meeting away from your work place. Traveling to different workplaces, if you happen to have more than one, within the city limits, or outside the general area, that is your tax home. You cannot deduct transportation expenses between your regular place of work and your home. You are entitled to deduct transportation expenses if you do not have a regular work place, but you travel within the metropolitan area limits, to temporary work sites. Parking fees at your place of business are considered nondeductible. However, if you pay parking fees while visiting a client or a customer or attending a business meeting, you are entitled to claim a tax deduction for these parking fees.

Sales Taxes Can Be Used As A Deduction As Explained By Joe Mastriano, CPA. State and local sales taxes are tax deductible for 2005 through 2009. If you decide to claim an itemized deduction for your sales taxes, you cannot deduct you state and local income taxes. The IRS gives you the option to choose between deducting your income taxes and deducting your sales taxes. Sales Tax Deduction If you live in a state with low income or no income taxes (like Texas, Alaska, Nevada, Tennessee and few more others), it is to your benefit to claim sales tax deduction. You may be able to deduct sales taxes for the purchase of a new qualified motor vehicle, beginning with February 2009. You can claim these taxes on Form 1040 as an addition to your standard deduction. You can also deduct these taxes using Schedule A, if you choose to itemize your deductions.

Real Property Taxes – IRS Definition Real property taxes are generally any state, local or foreign taxes on real property. Local benefits taxes are deductible if they are for repair, maintenance or for interest charges related to these benefits. Real Estate Property Tax Deduction You may be able to deduct the amounts you pay for real estate taxes, if you are a tenant shareholder in a cooperative housing corporation and you pay that corporation a share for your property taxes. If the corporation leases the land and buildings and, under a lease agreement are included real estate taxes, you cannot deduct your part of the taxes. The real estate property tax deduction does not apply for garbage collection fees or for homeowners’ association charges for maintaining common areas. Real Estate Tax Division If a real estate property is sold during the tax year, the seller must pay taxes until the date of the sale, and the buyer pays the taxes beginning with the date of sale. This applies regardless of the lien dates under local law. Under certain circumstances, you may be entitled to deduct your share, even if you actually did not pay it. If you need help calculating your real estate tax deduction, call us now at 713-774-4467! Still Need Help With Your Real Property Taxes, Contact Us Today!

Personal Property Taxes (imposed on possessions other than real estate and buildings) may be tax deductible, under certain circumstances. Personal Property Tax Deduction In order to claim a tax deduction, the taxes you paid on personal property ( boat, car) must be charged on a yearly basis. It does not count if these payments are made more or less than once a year. You can deduct personal property taxes calculated only on the value of the property. However, you can claim a property tax deduction for a yearly tax based on value, even if it is for the exercise of privilege. For example the fees for the privilege of registering a motor vehicle may be tax deductible.

Tax Deduction For Mortgage Insurance Premiums May Be Tax Deductible, Let Us Explain Why. The amount of mortgage insurance premiums you pay may be tax deductible. This temporary income tax break applies for policies issued after 2006. Mortgage insurance premiums will be tax deductible beginning with 2007 through 2010. Deducting Mortgage Insurance Premiums In order to qualify, the insurance must be in connection with home acquisition debt (loan used to buy, build or substantially improve your residence). Mortgage insurance premiums are treated as home insurance mortgage. They can be deducted over the term of the loan or within 84 months.

Tax Deductible Medical Insurance Eligibility Explained By Joe Mastriano, CPA. A deduction is allowed for medical insurance premiums within certain limits. Medical insurance premiums you pay may be included in your medical expenses as tax deductible if the premiums cover: Medicare B, supplementary medical insurance for elderly (Social Security Administration provides useful information in calculating the amount of your deduction). Medicare A, the part of Social Security that provides coverage for basic Medicare. Certain limits may apply. Prepaid insurance premiums you pay before the age of 65 for medical care coverage for yourself and your spouse, or dependent after you are 65 years old. Policies that provide coverage only for prescription drugs. Policies that pay for the loss or damage of your contact lenses. Policies that offer coverage for hospitalization and other medical fees, including surgical fees. Premiums paid for life insurance policies or for policies providing repayment for loss of earnings, or for the accidental loss life or limb, etc. are not tax deductible.

Deductions For Medical Expenses Can Be Complicated, Let Us Clear Things Up. You may be able to receive deductions for medical expenses for yourself, your wife and your dependent too if you choose to itemize. Medical expense deductions include payments that you make for diagnosis, treatments, cure or prevention of disease and expenses for transportation related to needed medical care. The cost of drugs released only with prescription (except the insulin) is tax deductible. You may report on your tax return in order to decrease your taxable income, fees for doctors, surgeons, dentists, chiropractors, podiatrists, psychiatrists, and Christian Science practitioners. Fees for hospital services, therapy, nursing services, ambulance hire, dental and X-ray services are also deductible. Payments for special equipment ( such as motorized wheelchairs, special telephones for the deaf and hand control in the car) and for special items ( including false teeth, eyeglasses, hearing aids, crutches) are tax deductible. You may deduct the cost of special school programs for children that correct a medical condition. The cost of meals and lodging for your medical treatment period may be included in your deductions for medical expenses. Medical Expenses Tax Deduction Calculation Find out if your deductions for medical expenses are tax deductible. In order to do the calculation use Schedule A on Form 1040. You are allowed to deduct only the amount that exceeds 7.5% of your adjusted gross income. We can calculate your medical expenses deductions! Call us now at 713-774-4467!

State, local or foreign income taxes withheld from your salary are tax deductible if claimed under the itemized income tax deduction category. Income Tax Deductions You can also deduct amounts for any estimated taxes you pay to state or your local government during the year. If you paid income tax during the taxable year, for any of the previous years, the payments are tax deductible and can receive the income tax deductions. You can also deduct any amount withheld from your wages in order to substantiate certain state disability benefit funds. Any employee contributions to disability funds that provide coverage for the loss of wages caused by unemployment are tax deductible. You can claim an itemized income tax deduction for foreign income taxes (that you pay in a foreign country).

Deductions Hospital Expenses You May Qualify For. The cost of your meals and lodging are tax deductible. In order to be able claim these amounts on your medical expenses, you have to show evidence that meals and lodging are furnished by a hospital or a similar institution where you received medical care. If the meals and lodging are not provided by a hospital, even if you are away from home and you are receiving medical treatment, they are not tax deductible. Meals And Lodging Tax Deduction You are allowed to claim a maximum deduction of $50 per day for you and for certain accompanying individual. You may qualify for this deduction if you receive medical care for a physical condition in a nursing home or a home for aged people.

Business gifts may be deductible, if they are ordinary and necessary for the course of your trade or business. You are not allowed to deduct more than $25 for each gift you made to any individual or to his family. There are certain items intended to serve as gift expenses, but they do not qualify for a $25 deduction such as: An item that costs $4 or less with your name clearly and permanently imprinted on the gift or one of the identical items, distributed by your business. Signs or other promotional material used for business advertising purposes. Gift Expenses – Proof In order to claim a tax deduction for business gifts, you need to provide documentation regarding the cost, the date and the description of the gift. You need to prove the relationship with the recipient of the gift expenses that you claim, including his name, title, occupation or other relevant information. You must describe the reason for making the gift or any business benefits that may result from giving it.

You may be able to deduct work-related educational expenses as a miscellaneous itemized tax deduction. In order to claim the deduction, the main purpose of these educational expenses must be to maintain or improve your skills for the current position you occupy, to maintain your position or to keep your present salary level. Claim Your Educational Expenses As Itemized Deductions You are entitled to report these expenses as itemized deductions on Form 1040, Schedule A. The amount of deductions you claim must exceed 2% of your adjusted gross income. Tuition fees for a degree that will make you eligible for a new business or trade are not deductible.