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AnalProbe · 05-28-2010, 03:26 AM

Source: Y.A.

If you're a professional, no one needs to tell you that taxes are one of your largest expenses. The IRS doesn't make a point of advertising ways to lower your taxes and it certainly won't complain if you don't take all the deductions you're entitled to. In fact, many professionals miss out on all kinds of deductions every year simply because they aren't aware of them -- or because they neglect to keep the records necessary to back them up.

Here are the top ten tax deductions that every professional business owner should know about.

1. Business operating expenses. This includes all your ordinary and necessary business expenses -- the bread-and-butter costs virtually every professional incurs for things like rent, supplies, and salaries. If you don't maintain an inventory or buy expensive equipment, these day-to-day costs will probably be your largest category of business expenses -- and your largest source of deductions.

2. Business entertainment. Oftentimes important business meetings, client contacts, and marketing efforts take place at restaurants, golf courses, or sporting events. The tax law recognizes this and allows professionals to deduct half of the cost of their business-related entertainment. However, taxpayers have abused this deduction in the past, so the IRS imposes strict rules limiting the types and amount of entertainment costs you can deduct.

4. Long distance travel. Professionals who travel overnight for business can deduct their airfare, hotel bills, and other expenses. And, if you plan your trip right, you can even mix business with pleasure and still get a deduction. However, IRS auditors closely scrutinize this deduction. To avoid unwanted attention, you need to keep proper records and understand the limitations on this deduction.

5. Long-term assets. A long-term asset is business property that you reasonably expect to last for more than one year. For professionals, this typically includes items such as office furniture, computer equipment, medical, dental, or other specialized equipment, buildings, automobiles, and books. There are two basic ways you can deduct long-term assets: by depreciating them (deducting some of the cost each year over the asset's useful life) or by using Section 179 of the Internal Revenue Code to deduct all of the cost in one year.

6.

7. Outside office. The great majority of professionals have outside offices where they do their work. An outside office -- that you rent or own -- presents many opportunities for tax deductions. Virtually all your outside office expenses are deductible, including rent, utilities, insurance, repairs, improvements, and maintenance.

8. Health insurance. As business owners, professionals have an advantage that most others don't have with regard to health care costs -- they can deduct many of their health insurance costs from their taxes. In addition, professionals can deduct a wide variety of uninsured medical expenses, including nonprescription medications, acupuncture, and eyeglasses.

9. Retirement plans. When it comes to saving for retirement, professional small business owners are better off than employees of most companies. This is because the federal government allows small businesses to set up retirement accounts specifically designed for small business owners. These accounts provide enormous tax benefits that are intended to maximize the amount of money you can put away in tax-deferred accounts during your working years.

10. Hiring workers. You may deduct most or all of what you pay someone you hire as a business expense. Thus, for example, if you pay an employee $50,000 per year in salary and benefits, you'll ordinarily get a $50,000 tax deduction. If you hire an independent contractor to perform services for your practice, you can deduct the amount you pay as a business operating expense.

===

Source: Ernst and Young...

50 OF THE MOST EASILY OVERLOOKED DEDUCTIONS

The following list will serve as a reminder of some deductions you can easily overlook when you prepare your return. It is not intended to be all-inclusive, nor applicable to everyone. The circumstances of your situation will determine whether you qualify.

1. Accounting fees for tax preparation services and IRS audits

2. Alcoholism and drug abuse treatment

3. Amortization of premium on taxable bonds

4. Appraisal fees for charitable donations or casualty losses

5. Appreciation on property donated to a charity

6. Casualty or theft losses

7. Cellular telephones

8. Cleaning and laundering services when traveling

9. Commissions and closing costs on sale of property

10. Contact lenses, eye glasses, and hearing devices

11. Contraceptives, if bought with a prescription

12. Costs associated with looking for a new job in your present occupation, including fees for resume preparation and employment of outplacement agencies

13. Depreciation of home computers

14. Dues to labor unions

15. Education expenses to the extent required by law or your employer or needed to maintain or improve your skills

16. Employee contributions to a state disability fund

17. Employee's moving expenses

18. Federal estate on income with respect to a descendent

19. Fees for a safe-deposit box to hold investments

20 Fees paid for childbirth preparation classes if instruction relates to obstetrical care

21. Foreign taxes paid

22. Foster child care expenditures

23. Gambling losses to the extent of gambling gains

24. Hospital services fees (laboratory work, therapy, nursing services, and surgery)

25. Impairment-related work expenses for a disabled individual

26. Improvements to your home

27. Investment advisory fees

28. IRA trustee's administrative fees billed separately

29. Lead paint removal

30. Legal abortion expenses

31. Legal fees incurred in connection with obtaining or collecting alimony

32. Margin account interest expense

33. Medical transportation, including standard mileage deduction and lodging expenses incurred for medical reasons while away from home

34. Mortgage prepayment penalties and late fees

35. Out-of-pocket expenses relating to charitable activities, including the standard mileage deduction

36. Part of health insurance premiums if self-employed

37. Penalty on early withdrawal of savings

38. Personal liability insurance for wrongful acts as an employee

39. Points on a home mortgage and certain refinancings

40. Protective clothing required at work

41. Real estate taxes associated with the purchase or sale of property

42. 50% of self-employment tax

43. Seller-paid points on the purchase of a home

44. Special equipment for the disabled

45. Special schools and separately stated feed for medical care included in tuition

46. State personal property taxes on cars and boats

47. Subscriptions to professional journals

48. Theft of embezzlement losses

49. Trade or business tools with life of 1 year or less

50. Worthless stock or securities

05-28-2010, 03:26 AM
AnalProbe pain in the Ass Industry Role: Join Date: Jan 2004 Posts: 3,727	<<< This will save you a lot of money >>> Source: Y.A. If you're a professional, no one needs to tell you that taxes are one of your largest expenses. The IRS doesn't make a point of advertising ways to lower your taxes and it certainly won't complain if you don't take all the deductions you're entitled to. In fact, many professionals miss out on all kinds of deductions every year simply because they aren't aware of them -- or because they neglect to keep the records necessary to back them up. Here are the top ten tax deductions that every professional business owner should know about. 1. Business operating expenses. This includes all your ordinary and necessary business expenses -- the bread-and-butter costs virtually every professional incurs for things like rent, supplies, and salaries. If you don't maintain an inventory or buy expensive equipment, these day-to-day costs will probably be your largest category of business expenses -- and your largest source of deductions. 2. Business entertainment. Oftentimes important business meetings, client contacts, and marketing efforts take place at restaurants, golf courses, or sporting events. The tax law recognizes this and allows professionals to deduct half of the cost of their business-related entertainment. However, taxpayers have abused this deduction in the past, so the IRS imposes strict rules limiting the types and amount of entertainment costs you can deduct. 4. Long distance travel. Professionals who travel overnight for business can deduct their airfare, hotel bills, and other expenses. And, if you plan your trip right, you can even mix business with pleasure and still get a deduction. However, IRS auditors closely scrutinize this deduction. To avoid unwanted attention, you need to keep proper records and understand the limitations on this deduction. 5. Long-term assets. A long-term asset is business property that you reasonably expect to last for more than one year. For professionals, this typically includes items such as office furniture, computer equipment, medical, dental, or other specialized equipment, buildings, automobiles, and books. There are two basic ways you can deduct long-term assets: by depreciating them (deducting some of the cost each year over the asset's useful life) or by using Section 179 of the Internal Revenue Code to deduct all of the cost in one year. 6. 7. Outside office. The great majority of professionals have outside offices where they do their work. An outside office -- that you rent or own -- presents many opportunities for tax deductions. Virtually all your outside office expenses are deductible, including rent, utilities, insurance, repairs, improvements, and maintenance. 8. Health insurance. As business owners, professionals have an advantage that most others don't have with regard to health care costs -- they can deduct many of their health insurance costs from their taxes. In addition, professionals can deduct a wide variety of uninsured medical expenses, including nonprescription medications, acupuncture, and eyeglasses. 9. Retirement plans. When it comes to saving for retirement, professional small business owners are better off than employees of most companies. This is because the federal government allows small businesses to set up retirement accounts specifically designed for small business owners. These accounts provide enormous tax benefits that are intended to maximize the amount of money you can put away in tax-deferred accounts during your working years. 10. Hiring workers. You may deduct most or all of what you pay someone you hire as a business expense. Thus, for example, if you pay an employee $50,000 per year in salary and benefits, you'll ordinarily get a $50,000 tax deduction. If you hire an independent contractor to perform services for your practice, you can deduct the amount you pay as a business operating expense. === Source: Ernst and Young... 50 OF THE MOST EASILY OVERLOOKED DEDUCTIONS The following list will serve as a reminder of some deductions you can easily overlook when you prepare your return. It is not intended to be all-inclusive, nor applicable to everyone. The circumstances of your situation will determine whether you qualify. 1. Accounting fees for tax preparation services and IRS audits 2. Alcoholism and drug abuse treatment 3. Amortization of premium on taxable bonds 4. Appraisal fees for charitable donations or casualty losses 5. Appreciation on property donated to a charity 6. Casualty or theft losses 7. Cellular telephones 8. Cleaning and laundering services when traveling 9. Commissions and closing costs on sale of property 10. Contact lenses, eye glasses, and hearing devices 11. Contraceptives, if bought with a prescription 12. Costs associated with looking for a new job in your present occupation, including fees for resume preparation and employment of outplacement agencies 13. Depreciation of home computers 14. Dues to labor unions 15. Education expenses to the extent required by law or your employer or needed to maintain or improve your skills 16. Employee contributions to a state disability fund 17. Employee's moving expenses 18. Federal estate on income with respect to a descendent 19. Fees for a safe-deposit box to hold investments 20 Fees paid for childbirth preparation classes if instruction relates to obstetrical care 21. Foreign taxes paid 22. Foster child care expenditures 23. Gambling losses to the extent of gambling gains 24. Hospital services fees (laboratory work, therapy, nursing services, and surgery) 25. Impairment-related work expenses for a disabled individual 26. Improvements to your home 27. Investment advisory fees 28. IRA trustee's administrative fees billed separately 29. Lead paint removal 30. Legal abortion expenses 31. Legal fees incurred in connection with obtaining or collecting alimony 32. Margin account interest expense 33. Medical transportation, including standard mileage deduction and lodging expenses incurred for medical reasons while away from home 34. Mortgage prepayment penalties and late fees 35. Out-of-pocket expenses relating to charitable activities, including the standard mileage deduction 36. Part of health insurance premiums if self-employed 37. Penalty on early withdrawal of savings 38. Personal liability insurance for wrongful acts as an employee 39. Points on a home mortgage and certain refinancings 40. Protective clothing required at work 41. Real estate taxes associated with the purchase or sale of property 42. 50% of self-employment tax 43. Seller-paid points on the purchase of a home 44. Special equipment for the disabled 45. Special schools and separately stated feed for medical care included in tuition 46. State personal property taxes on cars and boats 47. Subscriptions to professional journals 48. Theft of embezzlement losses 49. Trade or business tools with life of 1 year or less 50. Worthless stock or securities