In the rush to get tax returns prepared and filed by April

15th, many overpay their taxes. Following are a few tax

reduction tips that could help you save a bundle. Tax Credit For Starting A Small Business Pension PlanEstablishing a pension plan can help you retain important

employees. What many business owners don? realize is a tax

credit can be claimed if the business has 100 or fewer

employees. Meet this requirement and you can take a tax

credit of up to $500 in each of the first three years of the

plan. Tax credits are extremely valuable because they are

deducted directly from the taxes you owe, not gross

revenues. The credit is 50% of certain start up costs you incur in

each of the first three years. The costs include the

expenses incurred in establishing and maintaining the plan.

They also include the cost of any educational retirement

planning programs you provide for employees. For example, first assume that you spent $1,500 starting a

pension plan for your employees in 2004. Next assume that

you will spend $1,200 in both 2005 and 2006 for maintaining

the program and educating your employees. In this scenario,

you would be eligible to claim a tax credit of $500 in 2004,

2005 and 2006. Personal Loans To BusinessMany business owners lose track of loans they make to their

business. As a result, they incorrectly classify the

proceeds of the loan as part of their gross revenues. This

artificially raises the gross revenues of the business and

adds to the tax liability. Closely review your records for

2004 to make sure you are not making this mistake. Pay

particular attention to charges on personal credit cards.

You will be surprised how quickly the numbers add up. SUV Deduction Wounded, But Still AliveMuch has been made about the? UV Tax Deduction?that

allowed purchasers of SUVs over 6,000 pounds to immediately

deduct up to $100,000 of the cost. Many mistakenly believe

that the American Jobs Creation Act of 2004 eliminated this

deduction. It did not. Instead, it reduced the deduction to

$25,000 with the remaining amount allocated to depreciation.

This is still a significant immediate deduction. If you

purchased a non-SUV truck that weighed over 6,000 pounds in

2004, you are not restricted to a? ere?$25,000 deduction. Tsunami Relief Contributions Paid in 2005Millions of Americans contributed to charitable

organizations providing relief to Tsunami victims.

Typically, charitable contributions are deducted in the year

they are made. New legislation, however, allows you to

deduct Tsunami contributions you made in January 2005 on

your 2004 tax returns. Alternatively, you can wait and

deduct the donation on 2005 returns. Unfortunately, you

cannot deduct the contribution on both!Sales Tax DeductionIf you itemize deductions, you have a choice of deducting

your state and local income taxes OR your state and local

sales tax. This option is available for the 2004 and 2005

tax years. If you live in a state that does not collect

income tax, the optional sales tax deduction should be

claimed for significant tax savings. See IRS Publication 600

for more information. Deduction for Discrimination Lawsuit CostsIf you were required to pay attorney? fees and court costs

associated with a discrimination lawsuit, you may be able to

claim a tax deduction. The deduction is available only for

costs and fees incurred after October 22, 2004 in relation

to a judgment and settlement. The deduction is not limited

by the alternative minimum tax. Realistically, this

deduction will be more viable for the 2005 tax year, but a

few taxpayers may be eligible this year. There are numerous deductions and credits available if you

take the time to look for them. Taxes can be confusing, but

the savings justify the time and effort of finding all

available deductions and credits. Richard Chapo is CEO of http://www. businesstaxrecovery. com -

Obtaining tax refunds for small businesses by finding

overlooked tax deductions and credits through a free tax

return review.

Author:
Richard Chapo