39:["$","$L3a",null,{"category":"$3b","relatedArticles":[{"id":"cG9zdDoyODI1MDI=","databaseId":282502,"postId":282502,"author":{"node":{"id":"dXNlcjoz","databaseId":3,"userId":3,"avatar":{"url":"https://secure.gravatar.com/avatar/3b02fac7ed4b968df109a1571de56eef337973ae16dead35422edea7ab805eb9?s=96&d=mm&r=g","size":96,"__typename":"Avatar"},"description":"SmartAsset employs a team of writers and editors with years of experience in the editorial, news and personal finance industries. Some staff members also hold the Certified Educator in Personal Finance (CEPF®) designation from the Institute for Financial Literacy.","additionalMeta":{"expertise":null,"__typename":"User_Additionalmeta"},"email":null,"firstName":"Michael","fullName":"SmartAsset Team","lastName":"Carvin","name":"SmartAsset Team","postCount":{"pageInfo":{"offsetPagination":{"total":1668,"__typename":"OffsetPaginationPageInfo"},"__typename":"UserToPostConnectionPageInfo"},"__typename":"UserToPostConnection"},"slug":"mcarvin","__typename":"User"},"__typename":"NodeWithAuthorToUserConnectionEdge"},"categories":{"nodes":[{"id":"dGVybToxOTUwNg==","children":{"nodes":[],"__typename":"CategoryToCategoryConnection"},"databaseId":19506,"categoryId":19506,"link":"https://smartasset.com/tax-planning/articles","name":"Tax Planning","postCount":{"pageInfo":{"offsetPagination":{"total":149,"__typename":"OffsetPaginationPageInfo"},"__typename":"CategoryToPostConnectionPageInfo"},"__typename":"CategoryToPostConnection"},"slug":"tax-planning","ancestors":{"nodes":[{"name":"Taxes","slug":"taxes","__typename":"Category"}],"__typename":"CategoryToAncestorsCategoryConnection"},"parent":{"node":{"name":"Taxes","id":"dGVybToxMzY=","slug":"taxes","__typename":"Category"},"__typename":"CategoryToParentCategoryConnectionEdge"},"__typename":"Category"}],"__typename":"PostToCategoryConnection"},"content":"$3c","date":"2025-04-01T15:59:58","excerpt":"

Understanding the financial health of a business involves a lot of accounting. One of the most popular methods for determining the value of a business is straight line depreciation. Investors often choose the straight line method for its simplicity and consistency. Straight line depreciation shows how an asset’s value declines over time. This method aids […]

\n","featuredImage":{"id":"cG9zdDoyODM3MjM=","databaseId":283723,"altText":"A businessman working on a financial report of corporate operations.","date":"2025-04-01T15:36:51","fileSize":44442,"mimeType":"image/jpeg","modified":"2025-04-01T15:37:12","sourceUrl":"https://smartasset.com/wp-content/uploads/sites/2/2025/04/iStock-2172009103-modified-3ea8b9d5-ad99-4df9-9062-75aa8d7418e7.jpg","__typename":"MediaItem"},"modified":{"datetime":"2025-4-1","readable":"April 1, 2025","readableExtended":"April 1, 2025, 4:00pm ET"},"multipleBylinesByRole":{"editedBy":{"id":"dXNlcjoyMDU=","databaseId":205,"userId":205,"avatar":{"url":"https://secure.gravatar.com/avatar/01f240c2b0d90b313b0da2f508a21de3166341880494b3d2552dfa7e8fb9565d?s=96&d=mm&r=g","size":96,"__typename":"Avatar"},"description":"Mo Mozuch is a writer and editor based in New York City. He has worked throughout the editorial industry, including as Senior Editor for Newsweek and Executive Editor for International Business Times. 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","

A financial advisor can help you identify tax-saving opportunities and develop a strategy that aligns with your long-term goals. Connect with your advisor matches.

","

What Is Straight Line Depreciation?

","

The straight line method is a depreciation calculation used to allocate the lifetime cost of a tangible asset. By spreading the cost evenly across each year of the asset’s life, a clear and predictable expense pattern emerges. This can be particularly beneficial for budgeting and financial planning.

","

One of the primary advantages of straight line depreciation is its straightforward nature, which simplifies financial reporting and analysis. Businesses can easily predict their annual depreciation expenses, aiding in more accurate financial forecasting. This predictability is particularly useful for companies with long-term financial commitments or those seeking to maintain stable profit margins. Additionally, straight line depreciation provides stakeholders a clear view of how asset values are being managed over time.

","

How to Calculate Straight Line Depreciation

","

To calculate straight line depreciation, you need three key pieces of information:

","

The initial cost of the asset
Its estimated salvage value at the end of its useful life
The asset’s useful life itself

","

Next, subtract the salvage value from the initial cost. This gives you the depreciable amount, which you divide by the asset’s useful life. This calculation yields the annual depreciation expense, which remains constant each year.

","

For example, say a company purchases machinery for $10,000. It has a salvage value of $1,000 and a useful life of nine years. Using these figures, the straight line method would yield an annual depreciation expense of $1,000.

","

When to Use Straight Line Depreciation

","

","

Businesses often use straight line depreciation for assets that experience uniform wear and tear, such as office furniture or buildings. It works best for assets that have a predictable usage pattern and a clear, fixed lifespan.

","

Despite its advantages, straight line depreciation may not be suitable for all assets. For items that depreciate rapidly, such as vehicles or technology, an accelerated depreciation method might be more appropriate. They allow larger early deductions, helping reduce taxable income sooner. Evaluating the nature of the asset and consulting with a financial advisor can help determine the most effective depreciation strategy.

","

Other Depreciation Methods

","

Beyond straight-line depreciation, several alternative methods offer more flexibility by aligning expenses with how an asset is used or how quickly it loses value. These approaches can better reflect the economic reality of certain types of assets.

","

Declining Balance Method

","

The declining balance method accelerates depreciation, allowing for higher expenses earlier on. This benefits assets that lose value quickly or become obsolete, as it matches depreciation with the asset’s actual usage pattern.

","

Sum-of-the-Years’ Digits Method

","

This method also accelerates depreciation but uses a fraction based on the asset’s remaining life. The sum-of-the-years’ digits method decreases over time, which can be advantageous for assets that provide more utility in their early years. It offers a middle ground between straight-line and declining balance methods.

","

Units of Production Method

","

The units of production method ties depreciation directly to the asset’s usage. This is ideal for machinery or equipment with variable output. You calculate depreciation using the actual number of units produced, ensuring expenses align with the asset’s productivity. This method provides a realistic view of an asset’s value, especially in industries with fluctuating production levels.

","

Bottom Line

","

","

Understanding straight line depreciation can help businesses and individuals manage their assets more effectively. This method offers a straightforward approach to allocating the cost of an asset evenly over its useful life, making it a popular choice for those seeking simplicity and predictability in their investment portfolios. Spreading expenses helps businesses manage budgets and plan for future needs. Additionally, straight line depreciation provides a clear picture of an asset’s declining value, which can be key to making informed decisions about asset replacement or disposal.

","

Tax Planning Tips

","$4e","

Photo credit: ©iStock.com/ridvan_celik, ©iStock.com/miniseries, ©iStock.com/VioletaStoimenova

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Florida has no income tax. To take advantage of this benefit, it’s important to meet the Sunshine State’s residency requirements. You need to update your driver’s license, voter registration and spend most of the year in Florida to establish residency. As an added step, you may also want to talk to a financial advisor about […]

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","

Establishing Residency to File State Taxes in Florida

","

Establishing residency in Florida requires specific actions to show that you intend to make it your permanent home. These steps include getting a Florida driver’s license, registering to vote and filing a declaration of domicile with the county clerk. Taking these actions confirms your status as a Florida resident, which is beneficial for tax reasons.

","

To be recognized as a resident for tax purposes, you need to establish your domicile in Florida. Domicile means the place you plan to permanently live. While you may have several residences, you can only have one domicile.

","

To set up your domicile in Florida, you should consider buying or renting a home, moving your bank accounts and changing your mailing address. Spending over half the year in Florida also helps strengthen your residency claim. Together, these steps show your dedication to living in Florida as your main home.

","

How to Achieve State Residency in Florida

","

Establishing state residency in Florida can offer numerous benefits, including tax advantages and access to in-state tuition rates. However, achieving residency requires meeting specific qualifications and providing the necessary documentation.

","

This guide outlines five key steps to take and considerations for those looking to make Florida their official home:

","$66","

Tips for Choosing a State Residency for Taxes

","

","

Choosing a state of residence for tax purposes is a significant decision that can impact your financial well-being. Each state has its own tax laws, which can affect your income, property and overall cost of living.

","

Here are some key considerations to keep in mind when deciding on a state residence for taxes:

","$67","

Bottom Line

","

","

Establishing residency in Florida can be beneficial for tax purposes. To do this, you need to show that you intend to make Florida your permanent home. You can demonstrate this by getting a Florida driver’s license, registering to vote and filing a declaration of domicile. You should also spend the majority of the year living in Florida, change your mailing address, and move your financial and legal affairs to the state, such as opening a local bank account and working with a Florida attorney for estate planning.

","

Tax Planning Tips

","$68","

Photo credit: ©iStock.com/MStudioImages, ©iStock.com/Prostock-Studio, ©iStock.com/Anchiy

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The Tax Cuts and Jobs Act (TCJA) of 2017 eliminated the federal tax deduction for union dues from 2018 through 2025. However, certain states, such as New York, allow union members to deduct these dues on their state income tax returns. Union members should consult a tax professional to understand their specific state laws so […]

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","

A financial advisor who specializes in tax planning can help you create a financial plan with the goal of lowering your tax liability.

","

Union Dues Basics

","

Union dues are fees that members pay to labor unions to support collective bargaining, legal representation and other union-provided benefits. Here are some two general examples of what does and does not qualify as a union due:

","

Qualifying union dues include regular membership dues paid to a union, initiation fees for joining a union and fees paid for collective bargaining representation.
Non-deductible union expenses include political contributions or payments to union-sponsored political action committees (PACs), voluntary contributions to strike funds or union-sponsored charities and union insurance premiums.

","

Are Union Dues Tax-Deductible in 2025?

","

As of now, union dues are not tax-deductible on federal income tax returns—unless the taxpayer is self-employed.

","

The Tax Cuts and Jobs Act (TCJA) eliminated the ability for W-2 employees to deduct union dues as unreimbursed business expenses. This change means that unless Congress extends or modifies the law, union members will not be able to deduct these expenses when filing their 2025 taxes.

","

Union dues were previously deductible under the category of unreimbursed employee expenses, which allowed workers to deduct certain job-related costs that exceeded 2% of their adjusted gross income (AGI). When the TCJA was enacted, it temporarily eliminated this category of deductions for W-2 employees. The rationale behind this change was to simplify tax filing and offset the cost of other tax cuts.

","

Self-employed individuals, however, are still eligible to deduct union dues as a business expense on Schedule C of their tax return, since the IRS allows self-employed workers to claim necessary business-related costs.

","

Will Union Dues Be Tax-Deductible After 2025?

","

The TCJA’s provision that suspended the deduction for union dues is set to expire at the end of 2025. Unless new legislation is passed to extend the suspension, the deduction for miscellaneous itemized deductions—including union dues—could return in 2026.

","

However, tax laws are subject to change. Union members should stay informed about updates that may impact their filing status.

","

How to Determine If Your State Considers Union Dues Tax-Deductible

","

","

While federal tax law no longer allows most workers to deduct union dues, some states still permit this deduction on state income tax returns. The ability to claim union dues at the state level depends on local tax laws, and eligibility varies by location.

","

A few states maintain their own tax codes that still recognize union dues as deductible expenses. Examples include New York and Pennsylvania, where taxpayers can itemize deductions for work-related expenses.

","

Meanwhile, in states like Texas, Florida and Nevada, income taxes are not collected. As such, union dues deductions are not applicable at the state level.

","

Union members should consult their state’s tax department website or a tax professional to determine whether they qualify for a deduction at the state level.

","

Other Tax Deductions and Considerations

","

Even though union dues are not currently deductible on federal tax returns, union workers may still be eligible for other deductions and tax credits. Here are common common ones to keep in mind:

","

Educator expenses deduction: Teachers and eligible educators can deduct up to $300 per year in work-related expenses.
Self-employment deductions: Independent contractors and gig workers can deduct business-related expenses, including union dues, travel and home office costs.
Retirement contributions: Union members who contribute to tax-advantaged retirement accounts, such as a 401(k) or IRA, can benefit from tax-deferred growth and potential deductions.
Job-related moving expenses: While most moving expenses are no longer deductible for W-2 employees, active-duty military members may still claim this deduction.

","

Bottom Line

","

","

The Tax Cuts and Jobs Act of 2017 suspended the federal tax deduction for union dues from 2018 through 2025. Currently, only self-employed individuals can deduct union dues as a business expense on their Schedule C tax return. However, certain states, such as New York, allow union members to deduct these dues on their state income tax returns.

","

Tax Planning Tips

","$7b","

Photo credit: ©iStock.com/Sneksy, ©iStock.com/ilkermetinkursova, ©iStock.com/Andrii Iemelyanenko

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Dividing tax debt during a divorce depends on when the debt was incurred, state laws and other factors. Responsibility for back taxes may be shared or assigned to one spouse, often based on whether the debt arose before or during the marriage. However, IRS rules may not align with a divorce court’s decision. A financial […]

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","

Overview of Debt Division During Divorce

","

When dividing debt in a divorce, courts look at the type of debt and when it was incurred. Debts taken on during the marriage are typically considered shared, making both spouses liable.

","

Debts from before the marriage are usually treated as separate, with each spouse responsible for their own obligations.

","

Tax debt is often treated the same way. Whether the debt was accrued jointly or individually, and whether it occurred during the marriage, are important factors in determining responsibility.

","

Community Property vs. Equitable Distribution States

","

How tax debt is divided depends on whether the state follows community property laws or equitable distribution principles. In community property states, marital debts, including tax debt, are generally split equally between spouses, regardless of income or contributions. The nine community property states are:

","

Arizona
California
Idaho
Louisiana
Nevada
New Mexico
Texas
Washington
Wisconsin

","

In community property states, courts may decide that both spouses share the responsibility for any tax debt incurred during the marriage. This means the debt is typically divided equally, regardless of income differences or contributions.

","

In equitable distribution states, tax debt is divided based on what the court considers fair, not necessarily equal. Factors like each spouse’s financial situation, earning potential and contributions to the household are considered. As a result, one spouse may be assigned a larger share of the tax debt. This approach applies in all states except the nine that follow community property laws.

","

Does the IRS Honor Divorce Settlements?

","

A divorce settlement may assign tax debt to one spouse, but the IRS can still hold both spouses jointly liable for tax debt if they filed jointly during the marriage. Even if a divorce decree states otherwise, the IRS can pursue payment from either party.

","

To reduce this risk, individuals can seek innocent spouse relief from the IRS. This provision relieves a spouse of responsibility for tax debt if their ex-spouse improperly reported or omitted income on a joint tax return without their knowledge.

","

To qualify, the requesting spouse must show they were unaware of the errors and that it would be unfair to hold them liable. The IRS considers factors like financial involvement, personal benefit and financial circumstances.

","

To apply, individuals must file IRS Form 8857, explaining their situation and including supporting documents. The IRS will review the application, considering the couple’s financial details and communication during the marriage.

","

What Is Separation of Liability Relief?

","

","

Separation of liability relief allows joint filers to divide responsibility for understated tax liabilities between themselves and their ex-spouse.

","

The IRS assigns each spouse a portion of the tax debt based on their individual contributions and circumstances, offering a way to separate financial responsibility after a divorce or separation.

","

Unlike innocent spouse relief, this option is only available to those who are divorced, legally separated, or have lived apart from their spouse for at least 12 months.

","

To apply for separation of liability relief, individuals must submit IRS Form 8857. The IRS will review the application, considering factors such as each spouse’s financial contributions and their involvement in the tax reporting process.

","

What Is Equitable Relief?

","

Equitable relief is available for individuals facing unfair tax liability due to their spouse’s or ex-spouse’s actions, even if they were aware of the errors. This type of relief covers both understated tax liabilities and unpaid taxes, offering broader protection compared to other forms of relief.

","

This is different from separation of liability relief, which splits tax debt between spouses. Equitable relief applies when holding one spouse responsible would be unfair.

","

To qualify, the requesting spouse must demonstrate that holding them responsible for the tax debt would be unfair under the circumstances. The IRS considers factors such as financial hardship, the current financial situation of the requesting spouse and any evidence of abuse or deceit by the other spouse.

","

To apply for equitable relief, you must file IRS Form 8857. This form will allow you to explain your situation and provide evidence supporting your case.

","

Bottom Line

","

","

Dividing tax debt in a divorce can be difficult, especially with joint tax returns and IRS rules. Options like innocent spouse relief, separation of liability relief and equitable relief can help avoid unfair responsibility for a former spouse’s tax debt. A tax professional can guide you through these options.

","

Tax Planning Tips

","$93","

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