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Dear Valued Client,
This month's edition looks at more of the latest changes in legislation. Discussed here are special tax breaks that can be found with new car purchases and the “cash for clunkers" program passed in late June.
If you have not yet made an appointment for a mid-year consultation, now is the best time to do so. Keep in mind that this office can help you with your needs all year-round.
Tax Pro Plus
This month's edition looks at more of the latest changes in legislation. Discussed here are special tax breaks that can be found with new car purchases and the “cash for clunkers" program passed in late June.
If you have not yet made an appointment for a mid-year consultation, now is the best time to do so. Keep in mind that this office can help you with your needs all year-round.
Tax Pro Plus
Hope is Gone, American Opportunity is In
For a number of years, the tax code has provided an education incentive in the form of tax credits for post-secondary education tuition paid during the year for the taxpayer and dependents. Until 2009, these credits consisted of the Hope Credit, which was generally limited to a tuition credit that was capped at $1,800 (2008 cap) for each of the first two years of post-secondary education for each student, and the Lifetime Learning Credit, which provides up to $2,000 of credit for each family each year.
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Are You Being Snared By the Alternative Minimum Tax (AMT)?
Originally conceived to combat taxpayers in the higher-income brackets who utilized legal tax shelters and tax preferences to avoid paying income tax, the AMT can be tricky and hit you when least expected. The tax was supposed to inflict a “minimum” tax on those who were able to avoid the regular tax. However, years of inflation have pushed many middle-income taxpayers into the reach of the AMT.
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Tax Credit Guidance to Businesses Hiring Unemployed Veterans and Certain Youth
Businesses planning to claim the newly-expanded Work Opportunity Tax Credit (WOTC) for eligible unemployed veterans and unskilled younger workers hired during the first part of 2009 have until August 17 to request the certification required for these workers.
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SSA Provides New Social Security Verification Service
The Social Security Administration (SSA) has for some time provided employers with the ability to call the SSA to verify up to five employee names and SSNs at a time. This live telephone call-in service will terminate in the fall of 2008 and will be replaced with an automated telephone service (TNEV).
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IRS Looking to Ease Cell Phone Recordkeeping Requirements
Although cell phones have almost become a business necessity (try finding a pay phone these days), the government is still concerned that taxpayers who use them for business also use them for personal calls but write off the entire cost as a business expense.
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Tax Breaks for Qualified Plug-in Electric Vehicles
Current tax law provides for two separate credits for qualified plug-in electric vehicles. One was passed in 2008 to provide a tax credit for the purchase of electric cars, and another was passed in 2009 to provide credit for low-speed or two- or three-wheeled vehicles commonly referred to as neighborhood vehicles.
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Reporting Income & Expenses
Generally, where you and your spouse jointly own and operate an unincorporated business and share in the profits and losses, you would file a partnership return whether or not there is a formal partnership agreement. However, if you and your spouse are the sole owners, both materially participate in the business, and file a joint return for the year, you can elect to be treated as a qualified joint venture. This will allow you to split your income and deductions (in accordance with your individual ownership in the business) on separate sole proprietorship forms attached to your 1040 tax return and avoid filing a partnership return.
Is This the Year to Convert Your 401(k) to a Roth IRA?
Do you expect your 2009 income to be lower than normal because you’ve been forced to take a pay cut, your investments aren’t producing the income they used to, or for other reasons due to the current recession? If so, it may be an opportune time to convert some or all of your 401(k) funds into a Roth IRA.
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Special Tax Break on New Car Purchases Available in States with No Sales Tax
The Internal Revenue Service and Treasury Department recently announced that a tax break for the purchase of new motor vehicles is available in states that do not have a state sales tax. Under the American Recovery and Reinvestment Act of 2009, taxpayers who purchase a new motor vehicle this year are entitled to deduct state or local sales or excise taxes paid on the purchase.
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Save Time for Summer by Memorizing Transactions
Unfortunately, your work with QuickBooks doesn’t end just because it’s summer, the weather’s great, and school’s out. But there are ways to minimize your time spent managing your money and maximize your time at the beach. Memorizing transactions is one such way.
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Disclaimer: The tax advice included in this newsletter is an overview of some complex tax rules and is not intended as a thorough in-depth analysis of the tax issues discussed. Do not act on the information included in this newsletter without first determining how these issues apply to your particular set of circumstances and if there are any special tax laws or regulations that might apply to your situation.
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