Tax filing deadlines will be here before we know it. Here's an update on new deductions and some unresolved issues that might affect your tax bill. As always, the following observations are general guidelines only and are no substitute for individual counsel from your tax professional.

• The Federal Estate Tax Conundrum
  The 2001 Tax Act, generally known as EGTRRA, eliminated the Federal Estate Tax for the year 2010, and then reinstated it at the pre-EGTRRA level beginning in 2011. President Obama's 2010 budget contemplated freezing the 2010 tax at the same level as 2009, but Congress did not address the issue due to other legislative priorities. Accordingly, there is presently no Federal Estate Tax. What Congress will do about this is uncertain. Many observers feel there will be no movement until summer and that Congress will then simply reinstate the tax at its 2009 level, prospectively. Others are concerned that the tax will be made retroactive to January 1, 2010. With a number of options on the table, we will just have to wait and see what Congress and the President settle on.
• Tax Breaks for Education Costs
  First of all, the rules concerning tax breaks for education expenses have not become any less confusing. Self-employed taxpayers are allowed to take qualified education expenses that are related to their current business. Take care in determining what constitutes a qualified expense. An undergraduate degree is not covered because the IRS considers this to be preparing you for a new career rather than improving your existing skill set. Based on recent tax court decisions, MBA qualifications do count if the additional academic credentials will help you in your current job. Bear in mind that you might be eligible for a variety of types of tax breaks and it is possible that you will qualify for more than one tax perk for the same expense. To figure out how best to handle your situation, consult your professional tax adviser.
• Automobile Expenses
  If  you use the standard mileage deduction to claim automobile expenses, you probably know that the rate (since Jan. 1, 2010) has declined to 50 cents per business mile driven - down from the 55 cent rate in use for 2009. The IRS believes that gasoline and other costs are less than they were last year. You might consider using the alternative actual expenses method rather than the standard mileage method. Most business owners get a better break by using actual expenses. The down-side is that you must have records to show what you have paid to operate your car - costs that might include gas and oil, repairs, standard maintenance, license fees, etc. You are required to deduct a percentage from your claim based on your personal use of the vehicle. If you prefer the simpler standard mileage method, donÂÂ’t forget you are still required to keep a record of how much mileage involved business.
• Business Entertainment
  Only 50 percent of entertainment expenses - the cost of entertaining clients or customers for business reasons - is deductible according to current IRS regulations. Sports events, restaurant meals and even concerts or plays can be considered legitimate business entertainment. In the event of an audit, you will need records showing who was entertained, the business topics addressed and the guests' business relationship with you. Employee events - annual picnics or holiday parties - remain 100 percent deductible, and you are not required to support the deduction with an explanation of possible business benefits.

Contact your tax professional for further clarification on these tax updates and helpful tips that might save you money.