Tax Deductible Vacation
If you are like most people, you dream of a vacation that pampers, revitalizes, and entertains you, yet is affordable. By connecting a vacation with a business trip, you can more easily realize your dream. There are ways to make some of your expenses for trips deductible on your tax return.

Business Strategies
If you’re self-employed, you can deduct 100 percent of amounts paid for health insurance for yourself, your spouse, and your dependents. The amount is taken as an individual deduction from gross income to arrive at AGI. You can also deduct one half of your self-employment tax.

Timing Strategies
One of the easiest ways to lower your tax bill is to defer income into the next year and accelerate deductions into the current year. This is a good strategy if you expect your taxable income to be about the same or lower next year. So for example, if you’re an employee and expecting a bonus, you might try to convince your boss to defer payment until January 2007.

Family Strategies
You parents out there want to be sure to take advantage of every tax-savings opportunity available to you - the child credit, the dependent care credit, the adoption credit, and the earned income credit. And lucky for you, a credit is the best tax break you can get. Deductions reduce the amount of taxable income on which you must pay taxes, but tax credits reduce, dollar for dollar, the taxes you actually owe. There are also smart ways to shift income to your child.

Education Strategies
If you’re paying off student loans, you’ll be happy to know that the rules for deducting student loan interest recently became more liberal. Taxpayers can deduct up to $2,500 of the interest paid on a student loan, regardless of how long it takes to repay the loan.

For more information on these and other tax tips contact Hendershot, Burkhardt and Reed CPA’s at: Warrenton office 540-349-0119, Manassas office 703-361-1592 or by E-mailing us at info@hbrcpas.com.