Deductions | Best Tax Tips

Independent Contractor vs. Employee

Understanding the difference between an employee and an independent contractor is very important. If you are an employer, you are required to withhold and contribute a matching amount of FICA and Medicare taxes from your employee’s income. However, if your workers are independent contractors, you are only required to report payments of $600 or more on a Form 1099-MISC (Miscellaneous Income)....

January 15th, 2009 by The Tax Man

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The Economic Stimulus Act of 2008 Business Tax Benefits

The The Economic Stimulus Act of 2008 included bonus depreciation to encourage businesses to increase investment. However, companies in a loss position cannot take advantage of bonus depreciation because they do not have any taxable income against which to take the deductions. Image by cbcastro via Flickr The housing act allows taxpayers (corporations) to use accumulated alternative minimum...

January 10th, 2009 by The Tax Man

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Increased Vehicle Depreciation Deduction Limits

As part of the Economic Stimulus Act of 2008, Congress enacted a temporary increase in the allowable depreciation deduction for passenger vehicles under the luxury car rules. Under this law, taxpayers will be able to deduct just over $11,000 as first-year depreciation on business use vehicles purchased and placed in service in 2008. This increase in the luxury car limitation may be relevant if you...

January 5th, 2009 by The Tax Man

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Different types of scissors - sewing (left), p...

2008 Stabilization Act: Deduction for Educator Expenses

Teachers and other education workers, such as you, can deduct up to $250 of certain out-of-pocket classroom expenses from gross income. This deduction recognizes that many education professionals purchase classroom supplies with their own money. This popular deduction is now available for expenses incurred in 2008 and 2009. Married taxpayers who file joint returns are entitled to a total deduction...

January 2nd, 2009 by The Tax Man

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2008 Economic Stimulus Act – Code Sec. 179 Expense and Bonus Depreciation

Congress has passed the Economic Stimulus Act of 2008 (2008 Economic Stimulus Act), which increases the limitation on expensing depreciable assets and also provides for 50% bonus depreciation on new equipment for the year it is placed in service. More specifically, the 2008 Economic Stimulus Act provides an increase in the expense deduction limitation under Code Sec. 179 from $128,000 to $250,000 and...

December 30th, 2008 by The Tax Man

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Property deduction for non-itemizers.

Significantly less complicated is a new standard property deduction for taxpayers who do not itemize deductions. Image by farlane via Flickr Before the new law, only itemizers could deduct state and local property taxes. The housing act gives non-itemizers a limited deduction for state and local property taxes by increasing the amount of their standard deduction by the lesser of the amount...

December 21st, 2008 by The Tax Man

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2008 Standard Deduction

The basic standard deduction amounts for 2008 are: Head of household deduction is $8,000 Married taxpayers filing jointly and qualifying widow(er)s deduction is $10,900 Married taxpayers filing a separate deduction is $5,450 Single deduction is $5,450 The standard deduction amount for an individual who may be claimed as a dependent by another taxpayer may not exceed the greater of $900 or the sum of...

November 30th, 2008 by The Tax Man

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Housing Assistance Tax Act of 2008 Tax Benefits for Borrowers.

Image by TheTruthAbout… via Flickr Many homeowners are trying to refinance mortgages that offered low teaser rates but whose rates have now skyrocketed. The new law authorizes states to issue $11 billion more in mortgage revenue bonds for 2008 and allows qualifying subprime borrowers to use their state’s mortgage revenue bond program to refinance into a loan with a more favorable...

November 15th, 2008 by The Tax Man

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