Look for more tax advice from Jeffrey Parker in our upcoming Law & Tax Resource Center.
Before April 15th, it is important to work with your accounting team to identify tax deductions that will lower your tax liability. For instance, your out-of-town trip last year to work on a long-term project with a new client may have cost you a fortune, but there are deductions you can elect for those costs. Being tax savvy and carefully reviewing your business expenses from 2004 can make a big difference in what you may owe or receive from Uncle Sam. Fortunately, there are a number of old, revised, new and extended tax deductions that may lower taxable income and translate into greater tax savings.
Here, you'll find a tax tip each business day until March 31. Use them to help reduce your tax bill this year.
Business Travel, Meals and Entertainment Expenses:
When you travel for business, you can deduct the cost of plane fare, taxis, lodging and 50% of meals and entertainment costs. Other expenses qualify as well, such as the cost of dry cleaning, costs for shipping product samples/displays for your business trip, telephone calls and computer rental fees. When you entertain present or prospective customers, you may deduct 50% of the related cost if it is "directly"related" to the business and business is discussed or "associated with" the business and the entertainment takes place immediately before or after a business discussion.
Business Start-Up Costs and Organizational Costs
Business start-up costs and organizational costs of corporations and partnerships paid or incurred after October 22, 2004, can be deducted up to $5,000. This is phased-out when start-up costs reach $50,000. When this happens, the amount of start-up costs are amortized over a period of 180 months. Also, the amortization period for certain business start-up costs and organizational costs paid or incurred after October 22, 2004, has been increased to 15 years.
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Jeff Parker is a principal with Rothstein Kass-Certified Public Accountants (www.rkco.com), one of the top 20 largest international accounting and consulting firms based in the U.S. He is a certified public accountant and attorney in New Jersey. Jeff advises closely-held entrepreneurial companies on business finance issues and taxation; in addition to, providing tax services for real estate companies, broker-dealers and high net worth clientele for the Firm's financial and entrepreneurial services practices. Jeff also assists clients with estate and gift tax matters.
Jeff is a member of the American Institute of Certified Public Accountants (AICPA), the New Jersey Society of Certified Public Accountants (NJSCPA), the American Bar Association (ABA), the New Jersey State Bar Association (NJSBA) and the National Organization of Office and Industrial Properties (NAIOP.)