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Some Folks Pay A Lot Less Tax Than Others On Very Same Income?Did You Pay Too Much Tax In 2004?

Some Folks Pay A Lot Less Tax Than Others On Very Same Income?Did You Pay Too Much Tax In 2004?

Someone once remarked, "Next to being shot at and missed, nothing is quite so satisfying as an income tax refund." There's no question that saving money in taxes is high on everybody's list of financial priorities, especially small-business owners.

Taxes are an inevitable - and painful - part of every business owner's life. But there are ways to reduce, if not eliminate, your company's tax burden if you know how to use business-expense tax deductions to your advantage.

Most business owners know they owe taxes only on their net business profit - that is, their total profits after they subtract their deductions. As a result, knowing how to take full advantage of your deductible business expenses can dramatically lower your taxable profits.

Here are the 3 mostly overlooked tax deductions:

1. Full home office write-off: The rules allowing a taxpayer to claim the home office deduction have been loosened, beginning January 1, 1999. No longer does the home office need to be the "principal place of business" for the taxpayer. The home office test can now be satisfied if the taxpayer uses the home office for "administration or management activities" and there is no other fixed location in which the taxpayer performs such activities for his business. The home office still must be used exclusively for business purposes to qualify. This will allow more taxpayers who conduct business outside of their office, but use their home to perform administrative tasks, to qualify for the home office deduction.

2. Writing off family medical expenses: This strategy is a little more complicated but is well worth the extra effort. To use this strategy, first you must hire a spouse or other trusted family member to work for your home or small business; either full-time or part-time status will work. Next, you need to set up and sign a medical reimbursement plan. You may need the advice of an accountant to help you with this. This plan allows any sole proprietor to convert all family out-of-pocket medical expenses into legitimate business deductions. Finally, your spouse or family member pays all out-of-pocket medical expenses for the family, keeping receipts and documenting miles driven for medical purposes. At a specified time, your business reimburses your spouse or family member for these expenses and deducts them as a business expense.

3. Writing off your child's college education expenses: If you frown at the high cost of a college education, this tax strategy is for you. You can put your child on the payroll of your business for performing office chores and other business-related tasks.

The most common way to utilize young children in your business is for them to provide cleaning services, or routine copying, filing and typing. These are jobs that even a 10-year-old is clearly capable of performing, and jobs that you'd arguably have to pay someone to do if your child were not available.

In 2005, a child can earn up to $5,000 and pay no federal income taxes on the earnings because of the standard deduction. Your business can deduct wages paid to your child-provided the amount is reasonable and for bona fide work. Bottom line: You'll escape federal income taxes of up to $5,000 of your business income, and if you are a sole proprietorship, you will eliminate self-employment tax on the income as well.

Any income your child earns over and above the $5,000 standard deduction is taxable at your child's rate. Since the 10% tax bracket extends to $6,000 for a single filer, your child could earn an additional $6,000 and owe just $600 of federal income tax on the money. Because your marginal tax rate is likely much higher, the extra money your child earns may result in family tax savings. Even better, if your business is not incorporated, you won't have to withhold or pay FICA (Social Security and Medicare) payroll taxes on the earnings of a child under age 18.

Salim Omar, CPA is author of the newly published book, Straight Talk About Small Business Success In New Jersey. He is a well-known tax and financial educator. More free information can be obtained from his website http://www.OmarGroupCPA.com

In The News:

View: Tax cuts are good news but not enough to reverse slowdown Economic TimesCorporate tax reduction is credit positive for companies, but increases government’s fiscal risks, says Moody's The HinduCorporate tax cut positive but growth faces headwinds: Moody's Moneycontrol.comAmid tax euphoria, fiscal slippage concerns LivemintMassive fiscal slippages? Sitharaman’s tax cut gift may take deficit to 4.1%, warn analysts The Financial ExpressView full coverage on Google News

Corporate tax rate cuts, changes in income tax rules explained in 10 points LivemintFinance Minister unleashes corporate ‘animal spirits’ BusinessLineFinance Minister Nirmala Sitharaman cuts corporate taxes for domestic, new manufacturing companies India TodayView: Corporate income tax done, next should be GST Economic TimesBreaking it down: Corporate income tax rate cuts and what it means Moneycontrol.comView full coverage on Google News

Here is how the tax cuts will help sectors Moneycontrol.comHighlights: - Historic corporate tax rate cuts will have varied impact on sectors - Fiscal bonus to be used for investment or for passing on the benefits to ...

How the tax rate cut will impact earnings of top listed companies Business StandardThe cut in corporation tax will give a one-time boost of 13.2 per cent to corporate net profit and earnings per share of India's top listed companies that are paying ...

India's corporate tax rate now equals Singapore's after latest cut LivemintIndia's reduction in the corporate tax rate to among Asia's lowest was welcomed by investors as a boon that may help spur economic growth and company profits ...

Are steps on personal income tax coming? Economic TimesNEW DELHI: The sharp cut in corporate tax rate has triggered demand and speculation about more measures particularly on the personal income tax side.

Handset makers expect lower taxes to give fillip to R&D, manufacturing Economic TimesKOLKATA|NEW DELHI|MUMBAI: Consumer electronics and handset makers such as LG, Xiaomi, Dixon Technologies and OnePlus said Friday's tax cuts will ...

Nifty, Sensex soar nearly 6% as government cuts taxes to prop up growth India TodayIndian shares surged nearly 6% and were set for their best day in more than a decade after the government announced deep cuts in corporate taxes to revive ...

Corporate tax rate cut is chemotherapy for cancer that was being treated with Crocin: Niranjan Hiranandani |Full Coverage India TodayWelcoming the government's move to slash corporate tax rates for domestic companies, business tycoon Niranjan Hiranandani compared it to chemotherapy for ...

Booster shot: Corporate tax is cut; now cut personal taxes Times of IndiaThe headline corporate tax rate was cut yesterday through an ordinance by eight percentage points, to 22%. It's a bold step that seeks to unleash animal spirits ...

These 20 Nifty 50 companies pay more than 30% tax rate; time to buy? Moneycontrol.comAny company paying 33% tax rate will see its earnings go up by 12%. Overall, Nifty earnings going up by ~5-6% in FY20.

Direct tax collection picks up BusinessLineBut it is still far short of the targeted 16% growth rate in mop-up for the full year.

Corporate India’s tax burden may come down by 18% Economic TimesMUMBAI: The corporate tax rate has hovered between 25% and 29% since FY14 at the aggregate level for a sample of 167 companies from the BSE 200 index ...

Tax cut gives PM Narendra Modi perfect pitch to win American investments Economic TimesBy Archana Chaudhary and Vrishti Beniwal Prime Minister Narendra Modi arrives in the U.S. a day after delivering a $20 billion tax-cut stimulus for companies, ...

Corporate tax cut for domestic and new domestic manufacturing companies: FM Sitharaman announces Economic TimesThe government on Friday slashed the income tax rate for companies by almost 10 percentage points to 25.17 per cent and offered a lower rate to 17.01 per cent ...

Many top firms actually pay less than 25% tax Times of IndiaIndia Business News: An exemption-free tax rate of 22% — 25.17% including cess and surcharge — sounds attractive, but an analysis of the tax liability of firms ...

Still waiting for income tax refund? You might have made this mistake LivemintSeveral taxpayers have complained that although their ITRs have been processed yet they are yet to get tax refund.From this year, the income tax department ...

Rating agency S&P Global says India's corporate tax cuts credit negative India TodayRating firm S&P Global said on Friday India's move to cut corporate tax rates was a "credit negative development" despite potentially boosting the economy as it ...

Bankrupt companies take indirect tax department to court over GST software not being in sync with IBC Economic TimesMUMBAI: Several companies in administration have dragged the indirect tax department to court over the Goods and Services Tax (GST) software, which they ...

Finance ministry's move to lower corporate tax will help broaden tax base and reduce distortions in system FirstpostYears before Finance Minister Nirmala Sitharaman's major announcement to slash corporate tax, the late Arun Jaitley — Union finance minister in 2016 — had ...

Corporate tax cut 'surgical strike' on negative sentiments in economy: Analysts Moneycontrol.comThe reactions came as the government on Friday slashed the income tax rate for companies by almost 10 percentage points to 25.17 per cent and offered a ...

Corporate tax cut can translate into price discount of maximum 5 per cent, say industry veterans Business TodayIndustry stalwarts welcomed the corporate tax cut announced by the finance minister on Friday but felt that it could have done much before. At the India Today ...

Lower income tax rates likely in direct tax code regime, hints CBDT member The Financial ExpressThe Centre's gross tax buoyancy more than halved to 0.7 in FY19 from 1.5 in FY17, proving the above-trend surge in tax mop-up post-demonetisation was ...

E-assessment scheme for faceless scrutiny of income tax returns notified Economic TimesThe finance ministry has notified the e-assessment scheme 2019 for conducting faceless scrutiny assessment of income tax returns (ITR). The scheme involves ...

Advance tax mop-up posts dismal growth, rises by just 6% in H1FY20 Business StandardThe tax authorities are faced with a steep revenue collection target for 2019-20, with advance tax mop-up posting dismal growth in the first half of the financial ...

Opinion | FM’s move a boost for India’s tax competitiveness LivemintIt's now over to India Inc to utilize the extra cash flow through this tax savings bonanza.

Will Retirement Taxes On Roth IRAs And IRAs Impact You? ForbesIn this third article of my series on traditional IRAs and Roth IRAs, I provide comparisons to show the dynamics between these two retirement savings options in ...

GST Council to opt for just minor tax tweaks LivemintGOA : India's federal tax council is likely to ignore the rising chorus for tax relief at its Friday meeting and make only minor tweaks instead as a revenue shortfall ...

President Kovind clears ordinance to amend Income Tax Act LivemintNEW DELHI : The President Ram Nath Kovind on Friday cleared an ordinance to give effect to amendments in the Income Tax Act, 1961 and Finance Act, 2019.

Corporate tax cut can translate into maximum of 5 per cent product price reduction, say industry veterans India TodayIndustry stalwarts at the India Today Conclave Mumbai 2019 welcomed the corporate tax cut but felt that it could have done much before.

Rob the poor, reward the rich: AIMIM chief Asaduddin Owaisi on corporate tax cuts Moneycontrol.comAIMIM president Asaduddin Owaisi hit out at the Centre's move to slash corporate tax on September 20, wondering whether it was the working people or ...

FM Nirmala Sitharaman cuts corporate taxes for domestic, new manufacturing companies India TodayNirmala Sitharaman proposed to slash corporate tax for domestic companies and new local manufacturing companies through an ordinance.

Govt cuts corporate tax: How it will benefit Indian economy, markets Economic TimesIt was early Diwali on Dalal Street after Finance Minister Nirmala Sitharaman on Friday unveiled a bonanza for Indian companies as she slashed tax rate for ...

If you hit the $227 million Mega Millions jackpot, here's what you'll pay in taxes CNBCWhile the odds are stacked against players scoring the jackpot — your chance is about 1 in 302 million — the IRS is always a guaranteed eventual winner.

After 40 years, UP ministers to start paying income tax Economic TimesYogi Adityanath has asked ministers to start paying their own income tax, ending the four-decades-old practice.

Income tax department issues warning against this fake SMS LivemintThe income tax department has warned against a fake SMS doing the rounds.You should never click on such links sent in SMSes as it could be a phishing trap.

Corporate tax rate cut impact: Move will help draw attention of foreign investors, says IIFL's Jonathan Schiessl Moneycontrol.comThe cut in corporate tax and removal of additional surcharge on capital gains made by FII and domestic investors bode well for the Indian market, said Jonathan ...

Realtors hope tax cut will boost demand for residential properties Business StandardDemand for residential properties will get a boost after the cut in corporation taxes, said top property developers and consultants. "Capital investment, which had ...

Corporate tax cut: Uday Kotak, Kiran Mazumdar Shaw, Ajay Piramal, others welcome 'bold move' Business TodayCorporate tax cut: Kiran Mazumdar Shaw said that the move will revive growth and investment, while Uday Kotak called it a bold and progressive step forward.

Indias corporate tax cuts credit negative, will widen fiscal deficit: S&P Business StandardRating firm S&P Global said on Friday India's move to cut corporate tax rates was a "credit negative development" despite potentially boosting the broader ...

Finance Minister announces new tax refund scheme, easy credit to boost exports Economic TimesFinance Minister Nirmala Sitharaman Saturday announced a slew of measures to boost the economy, including a new scheme to refund taxes and duties on ...

Uttar Pradesh not only state where state exchequer pays income tax for CM, ministers MoneycontrolThe state exchequer has been bearing the tax burden of the chief minister and council of ministers of Uttar Pradesh since the last 40 years, under the Uttar ...

View: Sitharaman's corporate tax cut move is a sixer for sentiment, but a four for the economy Economic TimesWith the loan melas and the corporate tax cut, the government has addressed the short-term sentiment problem. The stock markets have responded with joy and ...

Corporate tax cut unlikely to benefit consumers in the short-term Business TodayDuring the festive season, auto companies may offer discounts of around 5 per cent or so, but in the long run, tax cuts are unlikely to keep the prices down as tax ...

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FM’s tax cuts a calculated risk Deccan HeraldFinance Minister Nirmala Sitharaman's decision announced on Friday to give away tax revenues worth Rs 1.45 lakh crore in the form of reduction in corporate ...

Exclusive | Deepak Parekh on corporate tax cut: 'It is a great boon' Moneycontrol.comIn an interaction with Moneycontrol, Deepak Parekh, Chairman, HDFC, spoke about how the corporate tax rate cut could revive investments and market ...

Corporate tax rate cut a long-term positive, will have chain effect: Rajat Rajgarhia, Motilal Oswal Moneycontrol.comThe government's move of slashing corporate tax rate will have a chain effect and bodes well for the market in the long term, Rajat Rajgarhia, Managing Director ...

Corporate tax cut to have 'minor' impact on fiscal deficit: Niti Aayog Economic TimesMUMBAI: The Rs 1.45-lakh crore tax giveaway is unlikely to widen fiscal deficit much as the shortfall will be met through increased tax collections due to higher ...

OPINION | Reduction in Corporate Tax Rates: Undoing the Mistakes News18Finance minister Nirmala Sitharaman has announced major relief to corporate sector and addressed the long-time demand of reducing the tax rates.

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Exemption from share buyback tax major relief to IT bigwigs Economic TimesThe government, as part of the Budget, had announced a 20 per cent tax on share buyback by listed companies.

Effective tax outgo falls by 28% for biggies, by 13% for smaller firms Economic TimesNEW DELHI: Bigger companies are set to benefit more from the corporate tax cuts as the effective tax for them will come down by up to 28 per cent. Smaller ...

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Exclusive: Bold move, will help economy, RBI Governor Shaktikanta Das reacts on corporate tax rate cuts India TodayReserve Bank of India Governor Shaktikanta Das praised the government for its "bold" move to slash corporate tax rates in a bid to boost the ailing Indian ...

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Tax task force recommends new tax slabs for individuals India TodayA government constituted Direct Tax Code task force, headed by CBDT member Akilesh Ranjan, is arguing for a new tax regime for individuals. It has proposed ...

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Bank stocks seen top beneficiaries of corporate tax cut LivemintIndia's bank stocks will be the biggest beneficiaries of Prime Minster Narendra Modi's move to slash the corporate tax rate to among the lowest in Asia, according ...

Young People Are Starving for Classes on Finance, Tips on Taxes BloombergGen Z is veering into the world of student loans, first apartments and financial burdens -- and they're hungry for help in figuring it all out. Three out of four recent ...

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In Pics | Here's what RBI Governor, business leaders said about FM Nirmala Sitharaman's corporate tax cut Moneycontrol.comFrom RBI Governor Shaktikanta Das to HDFC Chairman Deepak Parekh, here's who India Inc reacted to Finance Minister Nirmala Sitharaman's announcement ...

CBDT launches one-time facility for compounding of income tax offences Economic TimesA one-time facility to apply for compounding of income tax offences has been launched and taxpayers can avail this opportunity by December 31, a latest CBDT ...

India GST panel likely to recommend tax cuts on 20-25 products - sources Economic TimesThe panel, comprising state finance ministers and the federal finance minister as the chair, will shortly meet to decide on reducing tax rates to boost growth.

Too many taxes, anti-rich mindset need to go for economy to be back on its feet Times of IndiaThe economy is in bad shape. There is no more debate about it. With a second innings of a super-stable government, we should be looking at a double-digit ...

Taxing wealth at lower rate than income is wrong, says thinktank The GuardianThe government could gain £90bn in extra revenue over five years if it taxed income from wealth in the same way it taxes income from work, according to a ...

A wealth tax could totally remake charity in the United States Vox.comIn the past year, a massive, predominantly left-wing backlash to mega-philanthropy has broken out. Writers like Anand Giridharadas, Rob Reich, and Rutger ...

Firms may save $1 billion from buyback tax exemption Economic TimesMore than 70 companies had announced or completed buybacks totaling $5.2 billion before July 5.

Taxes are the least of Elizabeth Warren's 'Medicare for All' problems CNBCDemocratic presidential candidate Elizabeth Warren has been given more than one opportunity over the past two weeks to clarify her response to a key question ...

Is interest paid on foreign home loan tax-deductible in India? Moneycontrol.comInterest on housing loan paid outside India can be claimed as a deduction in calculating income from house property, only if some important conditions are met.

New corporate tax rates give companies flexibility to choose between tax structures: Seshagiri Rao, JSW Steel Moneycontrol.comDepending on its capex cycle, a company can choose between existing tax rates with payment of MAT or, the reduced corporate tax.

Google will pay over $1 billion after French investigation over dodged taxes The VergeGoogle has agreed to pay a $550 million fine to settle an investigation in France over its tax practices, Reuters reports.

Government to tweak Income Tax Act, won’t replace it with direct tax code MoneycontrolNEW DELHI : The government is unlikely to replace the Income Tax Act with the direct tax code, and will only incorporate select suggestions from the draft law to ...

New income tax rule on insurance maturity proceeds: 5 things to know LivemintThe new income tax rule on receipt of maturity benefits from insurance policy came into effect from 1st September.A higher TDS will be levied if the insurance ...

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Tax cut seen making domestic firms more competitive globally LivemintMove to tax new manufacturing firms set up after 1 Oct at 15% is expected to strengthen the MSME sector.The move is likely to help the Centre achieve the target ...

Realtors likely to offer incentives to spur demand as base corporate tax rate reduced to 22% Economic TimesMumbai: The government's decision to reduce corporate tax base rate to 22% is expected to provide real estate developers a buffer to offer further incentives ...

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Is it time to switch income tax with a sales tax? The GuardianIs it time for the US to consider switching from income tax to a progressive consumption tax as a way of addressing growing wealth inequality? Many economists ...

7 changes in income tax laws that come into effect from Sept 1 Economic TimesHere is the list of the seven main changes in tax laws that will come into effect from September 1.

Government needs to clarify on angel tax exemption, tax capital gains alike: Mohandas Pai Economic TimesBENGALURU: Venture capitalist TV Mohandas Pai has urged Finance Minister Nirmala Sitharaman to treat capital gains from both unlisted and listed ...

Welcome tax cuts but for the wrong persons! The Financial ExpressFew firms will invest till there is a strong demand-revival. that needed a cut in income tax rates; the fm has frittered away money on corporates & the ultra-rich.

Corporation tax cut a big positive, but demand recovery may take time Business StandardThe finance minister's announcement on Friday brought cheer to stock market participants and gave a boost to the broader markets, which recorded their highest ...

Tax bonanza will prove to be a game-changer: Anil Agarwal, Vedanta Economic TimesThe tax level has been brought to global level and on the top of it, incentives have been given for the new industry. This will give boost to the sentiment, says Anil ...

Some Folks Pay A Lot Less Tax Than Others On Very Same Income?Did You Pay Too Much Tax In 2004?

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