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Tax Tips Small Business

Employee Meals: When Does the 50-Percent Limit Apply?

Don't reduce your deduction if you aren't required to

In most cases, an employer is only allowed to deduct one-half of the expense that is paid to employees for meals. However, in some instances, the full amount is allowed.

Small Business Quick Tip

If your business owns a vehicle that is available for an employee's personal and business use, the vehicle is nevertheless considered used 100 percent for business on the business tax return. The personal-use percentage is included on the employee's W-2 as an additional compensation.

Saving for Your Retirement

Certain taxpayers are eligible for a tax credit

If your adjusted gross income is less than $50,000, you may be eligible for a nonrefundable credit against your income tax for elective contributions you make to §401 (k) plans, §403(b) annuities, §457 plans, SIMPLE or simplified employee pension (SEP) plans, traditional or Roth IRAs, and voluntary after-tax employee contributions to a qualified retirement plan or a 403(b) annuity.

The amount of your credit can be as much as 50%, 20%, or 10% of your contribution depending upon your filing status and modified adjusted gross income, giving you a maximum annual credit of $1,000 ($2,000 if married filing jointly).

This credit was due to expire at the end of 2006; however, recently enacted legislation made this credit permanent. After 2006, the adjusted gross income limits will be indexed for inflation, making more taxpayers eligible for the credit.

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Wednesday, 08 September 2010

What is an Enrolled Agent and why should I care?

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Tax Tips Personal

Converting a Traditional IRA to a Roth?

You may want to wait

At some point, taxpayers who have a traditional IRA may wish to convert it to a Roth. Roth IRAs are more flexible in that there are no required minimum distributions when the owner reaches age 70 1/2. In addition, qualified distributions from a Roth IRA are not taxable.

Personal Quick Tip

If your tax refund was too high or too low, adjust your withholding so it doesn't happen again next year. You can file a revised W-4 with your employer at any time to increase or decrease the number of exemptions you claim. The more exemptions you claim, the less tax your employer withholds from your wages, resulting in a smaller refund. Decreasing the number of exemptions results in more withholding and a larger refund.