Where can I get information on the sales tax deduction on vehicles? I purchased a car and heard that I get a tax write off.
Igor
Igor, you have come to the right place. I can give you that information.
Taxpayers who buy new motor vehicles this year may be entitled to a special tax deduction for the sales or excise taxes on those purchases when they file their 2009 federal tax returns next year. I say "may" because if your income is too high the law phases out the deduction. See item 8 below.
Here are the facts.
1. State and local sales and excise taxes paid on up to $49,500 of the purchase price of each qualifying vehicle are deductible.
2. Qualified motor vehicles generally include new cars, light trucks, motor homes and motorcycles.
3. To qualify for the deduction, the new cars, light trucks and motorcycles must weigh 8,500 pounds or less. Motor homes are not subject to the weight limit.
4. Purchases must occur after Feb. 16, 2009, and before Jan. 1, 2010.
5. Taxpayers who purchase new motor vehicles in states that do not have state sales taxes may be entitled to deduct other fees or taxes assessed on the purchase of those vehicles. Fees or taxes that qualify must be based on the vehicles’ sales price or as a per unit fee. These states include Alaska, Delaware, Hawaii, Montana, New Hampshire and Oregon.
6. Taxpayers who purchase qualified motor vehicles may claim the deduction when they file their 2009 tax return in 2010.
7. This deduction can be taken regardless of whether the buyers itemize their deductions or choose the standard deduction.Taxpayers who do not itemize will add this additional amount to the standard deduction on their 2009 tax return.
8. The amount of the deduction is phased out for taxpayers whose modified adjusted gross income is between $125,000 and $135,000 for individual filers and between $250,000 and $260,000 for joint filers.
Monday, October 19, 2009
Friday, October 16, 2009
SOCIAL SECURITY HITS POTHOLE
For the first time since the 1980s, Social Security will have to pay out more in benefits than it will take in. The program is projected to run a $10 billion deficit in 2010 and a $9 billion deficit in 2011, but the funding gap will not affect payments to beneficiaries because the program has run a surplus in the past.
Increases in benefit applications during the recession have caused the deficits: Applications for retirement benefits have jumped 23% from the previous year, with disability claims up about 20%.
Increases in benefit applications during the recession have caused the deficits: Applications for retirement benefits have jumped 23% from the previous year, with disability claims up about 20%.
Wednesday, October 14, 2009
FIRST-TIME HOMEBUYER CREDIT
I just closed escrow on the purchase of my first ever house in July 2009. Is my Realtor correct that I can file an amended 2008 tax return to claim the special credit for first time home buyers? Is he also correct that this credit is mine to keep forever and doesn’t need to be repaid? I had read somewhere that the credit was just an interest free loan that had to be repaid on future tax returns. It sounds too good to be true.
Owen
Owen, your Realtor is correct that you won’t have to wait until April 15, 2010 to receive this credit, which can be as much as $8,000. You have the option to claim the credit on your original or amended 2008 1040, as long as the purchase has been completed. This can get tricky if your modified Adjusted Gross Income is over $75,000 ($150,000 for married couples) because that places you into the dreaded “Evil Rich” category as defined by our imperial rulers in DC.
In regard to repaying the credit, there was a change in the original program from what we had in 2008. For homes purchased in 2008, the credit must be repaid in 15 annual installments, starting with the 2010 1040. If the home ceases to be the main residence before the 15 year repayment time is up, the remaining amount of the credit will be due in one lump sum on that year’s 1040.
For homes purchased between January 1, 2009 and December 1, 2009 (the current end of the credit qualification period), the credit does not have to ever be repaid if you use the home as your primary residence for at least three years. If you move out of the home, sell it or convert it to business or rental usage before the three year anniversary of your purchase, you will be required to repay the full amount of the credit in one lump sum on the tax return for the year in which the home ceased to be your principal residence.
As with any tax law, there are even more twists to this one; so be sure to work with a professional tax advisor.
Good luck. I hope this helps.
Larry Kopsa CPA
Owen
Owen, your Realtor is correct that you won’t have to wait until April 15, 2010 to receive this credit, which can be as much as $8,000. You have the option to claim the credit on your original or amended 2008 1040, as long as the purchase has been completed. This can get tricky if your modified Adjusted Gross Income is over $75,000 ($150,000 for married couples) because that places you into the dreaded “Evil Rich” category as defined by our imperial rulers in DC.
In regard to repaying the credit, there was a change in the original program from what we had in 2008. For homes purchased in 2008, the credit must be repaid in 15 annual installments, starting with the 2010 1040. If the home ceases to be the main residence before the 15 year repayment time is up, the remaining amount of the credit will be due in one lump sum on that year’s 1040.
For homes purchased between January 1, 2009 and December 1, 2009 (the current end of the credit qualification period), the credit does not have to ever be repaid if you use the home as your primary residence for at least three years. If you move out of the home, sell it or convert it to business or rental usage before the three year anniversary of your purchase, you will be required to repay the full amount of the credit in one lump sum on the tax return for the year in which the home ceased to be your principal residence.
As with any tax law, there are even more twists to this one; so be sure to work with a professional tax advisor.
Good luck. I hope this helps.
Larry Kopsa CPA
Tuesday, October 13, 2009
DON’T LET YOUR GUARD DOWN
It is an unfortunate fact that during tough economic times businesses experience an increase in fraud. Perpetrators can include angry laid-off former employees or staff members who justify stealing because they're worried about job security.
At the same time, organizations are so overwhelmed by the economy that they let their guards down. The result is a perfect storm for devastating losses. Make sure that you are watching your numbers, they can be an indicator that you have a problem. For more information let us know.
Larry Kopsa CPA
At the same time, organizations are so overwhelmed by the economy that they let their guards down. The result is a perfect storm for devastating losses. Make sure that you are watching your numbers, they can be an indicator that you have a problem. For more information let us know.
Larry Kopsa CPA
Monday, October 12, 2009
ENERGY POSTINGS
'Slippery Slope: EPA Moves Forward On New Rules To Regulate Greenhouse Gas Emissions'
(New York Times) -- NYTimes.com reports, "Unwilling to wait for Congress to act, the Obama administration announced this week that it was moving forward on new rules to regulate greenhouse gas emissions from hundreds of power plants and large industrial facilities." Obama "has authorized the EPA to begin moving toward regulation, which could goad lawmakers into reaching an agreement." The EPA's move is "significant, because under the Clean Air Act, any facility emitting more than 250 tons per year of a regulated pollutant must meet federal requirements." Bloomberg notes that "under the proposal ... the EPA said it won't target small sources despite the way the Clean Air Act is written because doing so would lead to 'absurd results.'" Senate Republicans last week "failed to block EPA from regulating greenhouse gases from stationary sources during a debate over legislation that funds the agency." Bryan Brendle, energy and resources policy director for the National Association of Manufacturers, said, "The proposed EPA regulation of large industrial sources is a 'slippery slope' that may 'discourage a lot of investment' in the U.S." See the story at <http://www.nytimes.com/2009/10/01/science/earth/01epa.html?_r=1&scp=1&sq=%2b%22National+Association+of+Manufacturers%22&st=nyt>
'Sen. Johanns: Senate Climate Change Bill Is Left Of Obama, Pelosi'
(Sen. Johanns release) – In a news release, Senator Mike Johanns this week made the following statement regarding the climate change legislation introduced Sept. 30 by Senators Barbara Boxer (D-CA) and John Kerry (D-MA): "This bill is an assault on agriculture. It is to the left of Speaker Pelosi and to the left of the President. It will lead to higher taxes, higher energy costs, a tighter squeeze on disposable income, more lost jobs and lower standards of living. For agriculture, the costs are real and the benefits are theoretical -- our country's heartland is in the crosshairs of this national energy tax." The bill proposes reductions of 20% below 2005 levels by 2020, compared to the (House-passed bill) Waxman-Markey reductions of 17% and the President’s proposed reductions of 14% in the same period.
'Manufacturers Voice Concern Regarding Latest Global Warming Bill'
(NAM release) -- The National Association of Manufacturers (NAM) Vice President Keith McCoy this week issued the following statement on climate change legislation introduced by Sens. Barbara Boxer (D-CA) and John Kerry (D-MA): "While the legislation omits many key details, the NAM is concerned that the current draft of the Boxer-Kerry climate change bill introduced (Wednesday) will increase costs for manufacturers and consumers ... while resulting in little benefit to the environment." A recent NAM analysis "showed the (House-passed climate bill) would result in up to 2.4 million lost jobs, higher energy prices for businesses and consumers, and cumulative GDP losses of up to $3.1 trillion over an 18-year period." See the full release at <http://www.nam.org/NewsFromtheNAM.aspx?DID=%7bDAA0484A-3637-4F17-B416-566C5CF6DEFF%7d>
'Kerry convinced climate bill has a shot'
(The Hill) -- TheHill.com reports Democrat Sen. John Kerry (D-Mass.) said he is "convinced" that the Senate's climate change bill "has a shot to pass." The Hill notes that Kerry, a coauthor of the Senate climate bill, and other supporters of the bill have "framed the need for the legislation as a national security issue." http://thehill.com/blogs/blog-briefing-room/news/60869-kerry-convinced-climate-bill-has-a-shot-in-the-senate
'Senate global warming bill leaves out ag wishes'
(Des Moines Register) -- The Des Moines Register reports that the Senate's version of the climate bill "lacks many of the provisions sought by farm groups." The story notes that "the House bill has already been under attack from farm organizations because of the potential impact on fuel and fertilizer." See more at <http://www.desmoinesregister.com/article/20090930/BUSINESS01/90930045/1030>
(New York Times) -- NYTimes.com reports, "Unwilling to wait for Congress to act, the Obama administration announced this week that it was moving forward on new rules to regulate greenhouse gas emissions from hundreds of power plants and large industrial facilities." Obama "has authorized the EPA to begin moving toward regulation, which could goad lawmakers into reaching an agreement." The EPA's move is "significant, because under the Clean Air Act, any facility emitting more than 250 tons per year of a regulated pollutant must meet federal requirements." Bloomberg notes that "under the proposal ... the EPA said it won't target small sources despite the way the Clean Air Act is written because doing so would lead to 'absurd results.'" Senate Republicans last week "failed to block EPA from regulating greenhouse gases from stationary sources during a debate over legislation that funds the agency." Bryan Brendle, energy and resources policy director for the National Association of Manufacturers, said, "The proposed EPA regulation of large industrial sources is a 'slippery slope' that may 'discourage a lot of investment' in the U.S." See the story at <http://www.nytimes.com/2009/10/01/science/earth/01epa.html?_r=1&scp=1&sq=%2b%22National+Association+of+Manufacturers%22&st=nyt>
'Sen. Johanns: Senate Climate Change Bill Is Left Of Obama, Pelosi'
(Sen. Johanns release) – In a news release, Senator Mike Johanns this week made the following statement regarding the climate change legislation introduced Sept. 30 by Senators Barbara Boxer (D-CA) and John Kerry (D-MA): "This bill is an assault on agriculture. It is to the left of Speaker Pelosi and to the left of the President. It will lead to higher taxes, higher energy costs, a tighter squeeze on disposable income, more lost jobs and lower standards of living. For agriculture, the costs are real and the benefits are theoretical -- our country's heartland is in the crosshairs of this national energy tax." The bill proposes reductions of 20% below 2005 levels by 2020, compared to the (House-passed bill) Waxman-Markey reductions of 17% and the President’s proposed reductions of 14% in the same period.
'Manufacturers Voice Concern Regarding Latest Global Warming Bill'
(NAM release) -- The National Association of Manufacturers (NAM) Vice President Keith McCoy this week issued the following statement on climate change legislation introduced by Sens. Barbara Boxer (D-CA) and John Kerry (D-MA): "While the legislation omits many key details, the NAM is concerned that the current draft of the Boxer-Kerry climate change bill introduced (Wednesday) will increase costs for manufacturers and consumers ... while resulting in little benefit to the environment." A recent NAM analysis "showed the (House-passed climate bill) would result in up to 2.4 million lost jobs, higher energy prices for businesses and consumers, and cumulative GDP losses of up to $3.1 trillion over an 18-year period." See the full release at <http://www.nam.org/NewsFromtheNAM.aspx?DID=%7bDAA0484A-3637-4F17-B416-566C5CF6DEFF%7d>
'Kerry convinced climate bill has a shot'
(The Hill) -- TheHill.com reports Democrat Sen. John Kerry (D-Mass.) said he is "convinced" that the Senate's climate change bill "has a shot to pass." The Hill notes that Kerry, a coauthor of the Senate climate bill, and other supporters of the bill have "framed the need for the legislation as a national security issue." http://thehill.com/blogs/blog-briefing-room/news/60869-kerry-convinced-climate-bill-has-a-shot-in-the-senate
'Senate global warming bill leaves out ag wishes'
(Des Moines Register) -- The Des Moines Register reports that the Senate's version of the climate bill "lacks many of the provisions sought by farm groups." The story notes that "the House bill has already been under attack from farm organizations because of the potential impact on fuel and fertilizer." See more at <http://www.desmoinesregister.com/article/20090930/BUSINESS01/90930045/1030>
DOLLARS PER CUSTOMER
Wouldn't you like to know what each customer costs you? It's easier than you think to figure out. You simply divide your expenses by the number of clients that walk through your doors.
Dollars Per Customer is a free service we offer our full-service clients. It is an interesting study of your financial information that allows you to view your income and expenses broken down per client. These numbers will obviously change over time, but the dollars per client should remain fairly constant. As more people come through your doors the numbers of clients will increase, but the dollars will as well, so this will give you a fairly good average.
Here's an example:
Let's say you pay $10,000/month in rent. In the last month you served 1,000 clients. Divide $10,000 by 1,000 clients and you get $10.00. This means that each customer costs you $10/month in rent.
This gives you a good idea of how Dollars Per Customer works. Granted, each individual salon's rent and number of clients will be different. Click on the following link to access Dollars Per Customer on our website: Dollars Per Customer
If you have any questions, shoot me an email at lkopsa@kopsaotte.com.
Dollars Per Customer is a free service we offer our full-service clients. It is an interesting study of your financial information that allows you to view your income and expenses broken down per client. These numbers will obviously change over time, but the dollars per client should remain fairly constant. As more people come through your doors the numbers of clients will increase, but the dollars will as well, so this will give you a fairly good average.
Here's an example:
Let's say you pay $10,000/month in rent. In the last month you served 1,000 clients. Divide $10,000 by 1,000 clients and you get $10.00. This means that each customer costs you $10/month in rent.
This gives you a good idea of how Dollars Per Customer works. Granted, each individual salon's rent and number of clients will be different. Click on the following link to access Dollars Per Customer on our website: Dollars Per Customer
If you have any questions, shoot me an email at lkopsa@kopsaotte.com.
IF YOU ARE HIRING YOU MIGHT WANT TO WAIT FOR A NEW TAX CREDIT
Lawmakers and economists like the idea of a tax credit for new job creation. A proposal to give a tax credit to companies for hiring is getting support from U.S. lawmakers, as well as former Labor Secretary Robert Reich and Nobel Prize-winning economist Edmund Phelps.
Economists in the Obama administration have been researching the idea for several weeks, but the White House has not formally announced a plan. "There's a lot of traction for this kind of idea," said Rep. Eric Cantor, the Republican whip. "If the White House will take the lead on this, I'm fairly positive it would be welcomed in a bipartisan fashion."
The New York Times
Economists in the Obama administration have been researching the idea for several weeks, but the White House has not formally announced a plan. "There's a lot of traction for this kind of idea," said Rep. Eric Cantor, the Republican whip. "If the White House will take the lead on this, I'm fairly positive it would be welcomed in a bipartisan fashion."
The New York Times
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