Make this a tax 'election year' ? Business Management Daily: Free ...

You can save hundreds or even thousands of dollars through certain ?tax elections? on the 2011 return you file by April 17. These choices often involve tax return comparisons.

What sort of elections are we talking about? Here are five prime examples.

1. Secure fast business write-offs. Due to recent tax law changes, many small business owners can deduct the full amount of business property they placed in service in 2011.

Strategy: First, elect the maximum Section 179 deduction for qualified property. If any cost remains, you can apply the bonus depreciation tax break.

For 2011, the maximum Section 179 deduction is $500,000, with a $2 million phaseout threshold. ?

But your Section 179 deduction is limited to your taxable income from your business activities. If you can?t deduct the full cost of property under the Section 179 rules, you can claim 100% bonus depreciation on the balance if the property is new (not used).

Tip: If any cost still remains, you can deduct it over several years under the regular depreciation rules.

2. Explore state tax options. Instead of deducting your state income tax, you can elect to write off state and local general sales taxes you paid during 2011. This optional sales tax deduction was extended through 2011 by the 2010 Tax Relief Act.

Strategy: Compare the numbers and take the bigger deduction. The state income tax deduction is probably the better choice if you reside in a state with mid-to-high income tax rates.

If you choose the sales tax option, you can write off your actual expenses, based on your receipts, or use the table on page A-11 at www.irs.gov/pub/irs-pdf/i1040sca.pdf. The IRS also provides guidance at http://apps.irs.gov/app/stdc.

Tip: In addition to the predetermined amount from the IRS table, you can write off actual state and local sales taxes on certain ?big-ticket items,? like cars and boats. ?

3. Do tax math for higher education. Although the price tag on a college diploma continues to escalate, at least you may qualify for some tax relief.

Strategy: Claim one of two tax credits for higher education or the tuition deduction. The catch: You can?t take both.

Usually, a credit is preferable to a deduction. Both the credits and the tuition deduction begin to phase out once modified adjusted gross income (MAGI) exceeds a threshold.

The maximum American Opportunity credit (formerly the Hope credit) is $2,500 per student. For 2011, this credit phases out at $80,000 and $90,000 of MAGI for single filers; $160,000 and $180,000 of MAGI for joint filers.

The maximum Lifetime Learning credit is $2,000 per taxpayer. For 2011, this credit phases out between $51,000 and $61,000 of MAGI for single filers; $102,000 and $122,000 for joint filers.

Tip: The tuition deduction, which is claimed ?above the line,? is $4,000 if your MAGI is $130,000 or less and $2,000 for a MAGI up to $160,000.

4. Try out a tax separation. Normally, a married couple will benefit from filing a joint return, but that?s not always true.

Strategy: Don?t automatically file jointly each year. In some cases, you may fare better overall by filing separate returns. ?

For instance, a married couple may save tax by filing separate returns if one spouse has an exceptionally large proportion of the couple?s medical and dental expenses, miscellaneous expenses or casualty losses. Reason: Those deductions have certain floors that are difficult to exceed jointly, but might be surpassed by one spouse.

Tip: If you file separately, you can?t claim certain tax benefits, such as the education credits (see No. 3). It might also affect your state income tax return.

5. Give yourself more tax ?room.? If you qualify, you can deduct expenses attributable to a part of your home used for business. Typically, the business-use percentage is based on square footage. ?

Strategy: The IRS says you can use any reasonable method for determining the percentage of business use of your home. Do the math.

For example, one common method is to base the percentage on the number of rooms if room sizes are comparable. If the business percentage with square footage is, say, 10% and you use one of eight rooms for business (12.5%), the ?rooms method? provides a bigger deduction.

Like what you've read? ...Republish it and share great business tips!

Attention: Readers, Publishers, Editors, Bloggers, Media, Webmasters and more...

We believe great content should be read and passed around. After all, knowledge IS power. And good business can become great with the right information at their fingertips. If you'd like to share any of the insightful articles on BusinessManagementDaily.com, you may republish or syndicate it without charge.

The only thing we ask is that you keep the article exactly as it was written and formatted. You also need to include an attribution statement and link to the article.

" This information is proudly provided by Business Management Daily.com: http://www.businessmanagementdaily.com/30240/make-this-a-tax-election-year "

Source: http://www.businessmanagementdaily.com/30240/make-this-a-tax-election-year

weather boston chili recipe chili recipe grimm tashard choice tashard choice puss in boots