As a small business owner we are always considering cost cutting, especially limiting tax liabilities. Below are some good tips for consideration:
- Going Green: With much fanfare, the government created several green tax initiatives last year. Consumers who installed new doors, windows or air-conditioning in 2009 can get tax credits of up to $1,500; those with new geothermal heating or solar energy systems can write off up to 30 percent of the costs. There’s also a credit of up to $3,400 for some hybrid cars or fuel-efficient motorcycles. But credits for the most popular hybrid, the Toyota Prius, have been phased out.
- College Credit; Thanks to the dismal economy, enrollment is up by more than 15 percent at higher education institutions. There’s a slew of credits for students, including a Lifetime Learning Credit of up to $2,000 for coursework to improve job skills. Joint filers can’t claim the credit if income exceeds $120,000.
- Healthy Savings: Nearly 23 percent of Americans with private health insurance have a high-deductible plan that allows contributions to a health-savings account with pretax dollars. This works best for people who are generally healthy and rack up few bills. Those under 65 can fund up to $7,950 for 2009.
- Taking Care: Long-term-care insurance, which can be used to cover a nursing home or in-house caregiver, can be pricey. But the premiums are considered a medical expense, and such expenses are deductible if together they exceed 7.5 percent of an individual’s taxable income. For individuals between the ages of 50 and 60, the maximum deduction for premiums in 2009 is $1,190.
- Fund Your Retirement: One way to trim your tax bill is to fully fund your individual retirement account. IRA deductions are available for contributions until Apr. 15, although individuals covered by an employer’s 401(k) can’t claim an IRA deduction if their taxable income exceeds $65,000 ($109,000 for joint filers). The maximum annual contribution is $5,000, or $6,000 for those 50 and older. Tax breaks for the self-employed are more lucrative: A SEP-IRA has no income limits, and the contribution limit is $49,000 for 2009.
At USBSI we understand the small business person’s needs. Please contact us so that we may satisfy your business needs.*SMB – Small to Mid-sized Business