DIVIDENDS June 2011

 

Mid-Year Review

The middle of the year is here! Are you on track to meet your 2011 financial goals?

  • Review your savings and debt reduction goals and adjust accordingly. You may feel encouraged by your progress and want to step up your goals!
  • Check your actual year-to-date income and expenses against your cash flow projections.
  • Assess your retirement contributions and other savings.
  • Project your income taxes and make sure you are not paying too much or too little through quarterly payments or withholding.

As with almost everything else in life, an ounce of prevention is worth a pound of cure. By making small adjustments throughout the year to respond to changes in your business and personal finances, your goals will remain within reach – or be exceeded.

If you need help with any of these areas, let us know and we will be happy to help you strategize and keep your eye on the prize.


Small Business Jobs Act: Self-Employed Health Insurance Deduction

Small Business Jobs Act: Self-Employed Health Insurance Deduction

As an incentive for small businesses, The 2010 Jobs Act provides a deduction for self-employed health insurance costs in computing "net earnings from self-employment."

In general, a self-employed business person must pay self-employment tax on his or her “net earnings from self-employment” of $400 or more. The deductions allowed in computing net earnings from self-employment include those deductions that are attributable to the trade or business from which the self-employment income is derived.

However, no deduction is allowed for:

  • Net operating losses,
  • Personal and dependent exemptions,
  • Earnings deposited by a commercial fisherman into a capital construction fund, or
  • Qualified production activities deduction.

In addition to the exclusions listed above, the self-employed health insurance deduction is generally not allowed in computing net earnings from self-employment. However, for the 2010 tax year only, The Act allows a deduction for self-employed health insurance costs.

One hundred percent of self-employed health insurance costs are deductible from gross income in arriving at adjusted gross income (as an “above-the-line” deduction). However, you may not claim the deduction for self-employed health insurance costs if you are eligible to participate in any subsidized health plan of an employer, your spouse’s employer, or effective
March 30, 2010, of your dependent’s or child’s (under age 27) employer. In addition, the deduction is limited to the amount of your earned income from the trade or business for which the health plan is established.

The Act provides a deduction for self-employment tax purposes for all of the health insurance costs (including long-term care premiums) incurred for yourself, your spouse, your dependents, and, effective March 30, 2010, any of your children who have not attained age 27 by year end.

By taking advantage of this tax benefit, you not only decrease your self-employment tax, but also your overall tax liability.


Business Baggage

Business Baggage

Thinking of doubling up work travel with your family vacation? Think carefully.

In order to qualify for tax benefits, travel expenses must be the ordinary and necessary expenses of traveling away from home for your business, profession, or job. You cannot deduct expenses that are lavish or extravagant or that are for personal purposes.

Travel expenses for conventions are deductible if you can show that your attendance benefits your trade or business. Special rules apply to conventions held outside the North American area.

Deductible travel expenses while away from home include, but are not limited to, the costs of:

  1. Travel by airplane, train, bus, or car between your home and your business destination. If you are provided with a ticket or you are riding free as a result of a frequent traveler or similar program, your cost is zero.
  2. Using your car while at your business destination.
  3. Fares for taxis or other types of transportation between the airport or train station and your hotel, the hotel and the work location, and from one customer to another, or from one place of business to another.
  4. Meals and lodging.
  5. Tips you pay for services related to any of these expenses.
  6. Dry cleaning and laundry.
  7. Business calls while on your business trip. This includes business communications by fax machine or other communication devices.
  8. Other similar ordinary and necessary expenses related to your business travel. These expenses might include transportation to and from a business meal, public stenographer's fees, computer rental fees, and operating and maintaining a house trailer.

Have questions about qualifying expenses? Talk to us prior to departure and we can help you sort out business from pleasure.

Source: www.irs.gov


Critical Upcoming Deadlines

June 15:
2nd Quarter Estimates Due

June 15:
Overseas Returns Due