Certain taxpayers are eligible for a tax credit

If your adjusted gross income is less than $50,000, you may be eligible for a nonrefundable credit against your income tax for elective contributions you make to §401 (k) plans,

§403(b) annuities, §457 plans, SIMPLE or simplified employee pension (SEP) plans, traditional or Roth IRAs, and voluntary after-tax employee contributions to a qualified retirement plan or a 403(b) annuity.

The amount of your credit can be as much as 50%, 20%, or 10% of your contribution depending upon your filing status and modified adjusted gross income, giving you a maximum annual credit of $1,000 ($2,000 if married filing jointly).

This credit was due to expire at the end of 2006; however, recently enacted legislation made this credit permanent. After 2006, the adjusted gross income limits will be indexed for inflation, making more taxpayers eligible for the credit.

Tax Tips Small Business

  • Electing to Expense the Cost of Your Business Assets

    Section 179 deduction limits increase

    The IRS allows taxpayers the option of either depreciating some assets over a specified number of years or deducting all or a portion of the cost in one year. The expense election, commonly referred to as the Section 179 deduction, is made in the year the asset is placed in service. The benefit is a large deduction in the current year that is not reduced even if the asset is placed in service late in the tax year.

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Small Business Quick Tip

  • Personal Assets to a Business

    If you have contributed personal assets, such as a computer or vehicle to your business, the lower of the fair market value or your cost basis of these assets qualifies as a business deduction, subject to depreciation limitations, beginning with the date of conversion.
Saturday, 15th December 2018
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Tax Tips Personal

  • Cleaning Out Your Closets?

    Items you donate may not qualify for a deduction

    It used to be that you could take all your unused clothing and household items to the local Goodwill, Salvation Army, or thrift store and reap a nice charitable contribution deduction.

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Personal Quick Tip

  • Mutual Fund Cost Basis

    If you own mutual funds, it is important to keep track of your reinvested dividends. These dividends increase your cost basis resulting in a lower capital gain when you sell the fund.