Tag Archives: 2012

Business Travel – What Can You Deduct?

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Travel for business can be a tricky thing to navigate.  Some go on a trip that is only for business, but many, especially business owners, may tack on some personal time to either end of a business trip.  In the end, what can you deduct? The following are some general rules to keep in mind.

  • Within the U.S. all your costs to get to your destination are deductible if the primary purpose of the trip is for business.  Usually, this means you spend more than half your time conducting business.  If the trip isn’t more than 50% for business, you can’t deduct any of the travel costs, and travel costs for family not conducting business aren’t ever deductible.
  • Costs on your days spent conducting business are deductible, with meals and entertainment limited to 50%, and all other costs such as hotels and cabs allowed at 100%.  Again, these expenses need to relate directly to business.

Remember, the key here is that there needs to be a business purpose for the trip.  Taking a vacation and spending a few hours out of a week discussing business won’t completely convert an otherwise personal vacation to a totally deductible business expense.  As always, we’re here to help!

Extending Tax Cuts – Two Approaches

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In the past week, both House Republicans and Senate Democrats have introduced bills to extend the Bush-era tax cuts, most of which have either already expired or will expire at the end of this year.

The Republicans are moving to extend the cuts for all taxpayers, while the Democrats are pushing to extend them for only those earning $250,000 or less.  Each plan faces almost certain refusal by the other side of the aisle, which leaves taxpayers in the same position they were – with expiring tax cuts and no good prospect for renewal.

We’ll keep you informed of all the latest as things develop.

This Just In: MN 2% Contractor Withholding Repealed

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The Minnesota Department of Revenue announced today that, effective June 30, 2012, businesses paying individuals in the construction trades will no longer be required to withhold 2% of the payment and remit it as income tax withholding to the State.

This is great news for all of you in the real estate and construction trades.  It makes conducting business with your contractors after that date a much simpler process.  Payments made prior to June 30 will still be under the old rules, so be sure to withhold as needed for payments made through this date.

Questions?  Give us a call and we’ll be happy to discuss the finer points with you.

2013 FSA Limits

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The 2010 Health Care Act made changes to the amount of contributions allowed to be made to Flexible Spending Accounts (FSA) for medical expenses. For plan years starting in 2013, the maximum FSA contribution for medical expenses is $2,500.  The limitation will be indexed annually for inflation.

Spring Tax Update

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As we come out of the busy tax season, it’s now when we get to take a closer look at what’s in motion on the tax front in Washington.  Here’s a quick synopsis of what we’re seeing.

  • Federal Changes
    • These very much depend on who comes out the winner in November, and not much is expected to be accomplished until after the election.
    • Regardless of who wins, broad tax reform has been a consistent message of both parties, though with very different ideas on how that would look.
    • The “AMT Patch” expired at the end of 2011.  This rather technical issue is one that will have a big impact on average Americans in the 2012 year if they don’t do something about it.

We’ll keep watching for any developments and bring them to you as they come about.