Taxpayers who buy a new car or several other types of motor vehicles this year may be entitled to a special tax deduction when they file their 2009 federal tax returns next year. The tax break is part of the American Recovery and Reinvestment Act of 2009.
Here are seven things you should know about this new deduction:
1. State and local sales taxes paid on up to $49,500 of the purchase price of qualifying vehicles are deductible.
2. Qualified motor vehicles generally include new (not used) cars, light trucks, motor homes and motorcycles.
3. Purchases must occur after Feb. 16, 2009, and before Jan. 1, 2010.
4. This deduction can be taken regardless of whether or not you itemize other deductions on your tax return.
5. Taxpayers will claim this deduction when filing their 2009 federal income tax return next year.
6. 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.
7. The deduction may not be taken on 2008 tax returns.
Sunday, May 31, 2009
Unemployment Benefits Tax Free for 2009
Every person who receives unemployment benefits during 2009 is eligible to exclude the first $2,400 when they file their tax return next year. For a married couple, the exclusion applies to each spouse separately. Unemployment benefits your clients received in 2008 and prior years remain fully taxable.
Ten Tips for Deducting Charitable Contributions
When preparing to file your federal tax return, don’t forget your contributions to charitable organizations. Your donations could add up to a sizeable tax deduction if you itemize on IRS Form 1040, Schedule A.
Here are a few tips to ensure your contributions pay off on your tax return:
1. Contributions must be made to qualified organizations to be deductible. You cannot deduct contributions made to specific individuals, political organizations and candidates.
2. You cannot deduct the value of your time or services. Nor can you deduct the cost of raffles, bingo or other games of chance.
3. If your contributions entitle you to merchandise, goods or services, including admission to a charity ball, banquet, theatrical performance or sporting event, you can deduct only the amount that exceeds the fair market value of the benefit received.
4. Donations of stock or other property are usually valued at the fair market value of the property. Special rules apply to donation of vehicles.
5. Clothing and household items donated must generally be in good used condition or better to be deductible.
6. Regardless of the amount, to deduct a contribution of cash, check, or other monetary gift, you must maintain a bank record or a written communication from the organization containing the name of the organization, the date of the contribution and amount of the contribution.
7. To claim a deduction for contributions of cash or property equaling $250 or more you must obtain a written acknowledgment from the qualified organization showing the amount of the cash and a description of any property contributed, and whether the organization provided any goods or services in exchange for the gift. One document from the organization may satisfy both the written communication requirement for monetary gifts and the written acknowledgement requirement for all contributions of $250 or more.
8. If you claim a deduction of more than $500 for all contributed property, you must attach IRS Form 8283, Noncash Charitable Contributions, to your return.
9. Taxpayers donating an item or a group of similar items valued at more than $5,000 must also complete Section B of Form 8283, which requires an appraisal by a qualified appraiser.
10. Contributions made for relief efforts in a Midwest disaster area receive special benefits. For more information, see Publication 4492-B, Information for Affected Taxpayers in the Midwest Disaster Areas.
Here are a few tips to ensure your contributions pay off on your tax return:
1. Contributions must be made to qualified organizations to be deductible. You cannot deduct contributions made to specific individuals, political organizations and candidates.
2. You cannot deduct the value of your time or services. Nor can you deduct the cost of raffles, bingo or other games of chance.
3. If your contributions entitle you to merchandise, goods or services, including admission to a charity ball, banquet, theatrical performance or sporting event, you can deduct only the amount that exceeds the fair market value of the benefit received.
4. Donations of stock or other property are usually valued at the fair market value of the property. Special rules apply to donation of vehicles.
5. Clothing and household items donated must generally be in good used condition or better to be deductible.
6. Regardless of the amount, to deduct a contribution of cash, check, or other monetary gift, you must maintain a bank record or a written communication from the organization containing the name of the organization, the date of the contribution and amount of the contribution.
7. To claim a deduction for contributions of cash or property equaling $250 or more you must obtain a written acknowledgment from the qualified organization showing the amount of the cash and a description of any property contributed, and whether the organization provided any goods or services in exchange for the gift. One document from the organization may satisfy both the written communication requirement for monetary gifts and the written acknowledgement requirement for all contributions of $250 or more.
8. If you claim a deduction of more than $500 for all contributed property, you must attach IRS Form 8283, Noncash Charitable Contributions, to your return.
9. Taxpayers donating an item or a group of similar items valued at more than $5,000 must also complete Section B of Form 8283, which requires an appraisal by a qualified appraiser.
10. Contributions made for relief efforts in a Midwest disaster area receive special benefits. For more information, see Publication 4492-B, Information for Affected Taxpayers in the Midwest Disaster Areas.
Seven Things you Should Know When Selling Your Home
People who sell their home may be able to exclude the gain from their income. Here are seven things every homeowner should know if they sold, or plan to sell their house:
1. Amount of exclusion. When you have gain from the sale of your home, you may be able to exclude up to $250,000 of the gain from your income. For most taxpayers filing a joint return, the exclusion amount is $500,000.
2. Ownership test. To claim the exclusion you must have owned the home for at least two years during the five year period ending on the date of the sale.
3. Use test. You also must have lived in the house and used it as your main home for at least two years during the five year period ending on the date of the sale.
4. When not to report. If you are able to exclude all of the gain from the sale of your home, you do not need to report the sale on your federal income tax return.
5. Reporting taxable gain. If you have gain which cannot be excluded, it is taxable and must be reported on your tax return using Schedule D.
6. Deducting a loss. You cannot deduct a loss from the sale of your home.
7. Rules for multiple homes. If you have more than one home, you may only exclude gain from the sale of your main home and must pay tax on the gain resulting from the sale of any other home. Your main home is generally the one you live in most of the time.
1. Amount of exclusion. When you have gain from the sale of your home, you may be able to exclude up to $250,000 of the gain from your income. For most taxpayers filing a joint return, the exclusion amount is $500,000.
2. Ownership test. To claim the exclusion you must have owned the home for at least two years during the five year period ending on the date of the sale.
3. Use test. You also must have lived in the house and used it as your main home for at least two years during the five year period ending on the date of the sale.
4. When not to report. If you are able to exclude all of the gain from the sale of your home, you do not need to report the sale on your federal income tax return.
5. Reporting taxable gain. If you have gain which cannot be excluded, it is taxable and must be reported on your tax return using Schedule D.
6. Deducting a loss. You cannot deduct a loss from the sale of your home.
7. Rules for multiple homes. If you have more than one home, you may only exclude gain from the sale of your main home and must pay tax on the gain resulting from the sale of any other home. Your main home is generally the one you live in most of the time.
Sunday, December 28, 2008
Guide to Proving Your Deductions
If you have a small business, you should soon be receiving a guide in the mail from our office on how to make sure you can prove your business deductions. The IRS is accelerating its audit and collection activities, and we want to make sure you're **bulletproof** in case your return is ever targeted. The federal government is going to need more and more money to pay for all these RIDICULOUS bailouts, so read this guide and put on your vest! (If for some reason you don't receive your guide, call and ask for a copy. We'll be happy to email you another.)
Merry Christmas and Happy New Year!
Merry Christmas and Happy New Year! Henry and I have had a wonderful time celebrating Christmas with both our families, and we're looking forward to spending a little time with some friends before the new year gets here and our lives get totally crazy again. We both hope you've had a wonderful time celebrating with your family, too, and we wish you a blessed new year.
Thursday, December 11, 2008
Thanksgiving message - just in case you missed it...
Here's the Thanksgiving message we sent out recently. It has come to our attention that a few of our cards were delivered with postage due in error. We hope this only happened with the few cards we already know about. If it happened to you, though, please let us know.
Happy Thanksgiving!
It’s that time of year to stop and give thanks and when I count my blessings, I count you TWICE. Not only am I thankful that you let me be your CPA and one of your trusted advisors, I’m also thankful that you let me be your friend. As we move into more and more uncertain times, I’ll be here for you to help you navigate the changes ahead, weather this economic storm, and keep as much of what you make as you possibly can.
Family update: We have lots of exciting things going on in our family this year. My daughter, Jessica, signed a lease on her first apartment about a week ago and then got official word a few days later that she’s been accepted to A&M. She’ll be moving just in time to get settled in good before my sister, who lives in that area, is expecting her third child. And speaking of babies, two of Henry’s daughters had their first children earlier this year: welcome Avery McGraw and Isaac Hommel!
Staffing update: If you haven’t been by the office lately, you’ll see a few changes the next time you’re in. Henry is now sharing an office with us, and we said a sad goodbye to Evelyn at the end of May. Rana Walton then joined us in mid-August. Rana is a junior at UT Tyler studying accounting, and Lynn and I are excited to have her as part of our team. And, of course, Lynn is still keeping us all on track!
Keeping up with changes: We expect to see tax and other changes coming at us quickly, so we’ve started a blog to keep you more up-to-date. Please visit often for the latest information and tips. You can find it at www.dennardcpa.blogspot.com or by clicking on the blog link from our website at www.cdennard.com.
Bulletproof your business deductions: As government programs require more and more money (especially that $700 billion “mortgage” Congress just signed your name to), we expect the IRS to step up its audit efforts accordingly. To help you make sure your deductions are “bulletproof”, we’re preparing a guide that explains exactly what documentation you’ll need in case your return is audited. The guide will be ready mid-December, so be sure to call and get your copy.
Tax season filing deadlines and preparation fee update: To make sure we have adequate time to prepare your tax return accurately and take advantage of all the tax-saving opportunities available to you, we MUST have your tax info no later than February 28 to prepare your corporate return by the original due date and no later than March 31 to prepare your individual return by the original due date. We’ll file an extension for you if you’re not able to get us your info by those dates. Also effective 1/1/09, our new tax preparation hourly rate will be the market rate of $250 per hour. However, if you bring us the info we need to get your tax return finished by the original due date OR your extended corporate return finished no later than 8/31 and your extended individual return no later than 9/30, we will reward you with a 50% discount off that rate. (Please allow 2 weeks preparation time on all returns.)
Happy Thanksgiving!
It’s that time of year to stop and give thanks and when I count my blessings, I count you TWICE. Not only am I thankful that you let me be your CPA and one of your trusted advisors, I’m also thankful that you let me be your friend. As we move into more and more uncertain times, I’ll be here for you to help you navigate the changes ahead, weather this economic storm, and keep as much of what you make as you possibly can.
Family update: We have lots of exciting things going on in our family this year. My daughter, Jessica, signed a lease on her first apartment about a week ago and then got official word a few days later that she’s been accepted to A&M. She’ll be moving just in time to get settled in good before my sister, who lives in that area, is expecting her third child. And speaking of babies, two of Henry’s daughters had their first children earlier this year: welcome Avery McGraw and Isaac Hommel!
Staffing update: If you haven’t been by the office lately, you’ll see a few changes the next time you’re in. Henry is now sharing an office with us, and we said a sad goodbye to Evelyn at the end of May. Rana Walton then joined us in mid-August. Rana is a junior at UT Tyler studying accounting, and Lynn and I are excited to have her as part of our team. And, of course, Lynn is still keeping us all on track!
Keeping up with changes: We expect to see tax and other changes coming at us quickly, so we’ve started a blog to keep you more up-to-date. Please visit often for the latest information and tips. You can find it at www.dennardcpa.blogspot.com or by clicking on the blog link from our website at www.cdennard.com.
Bulletproof your business deductions: As government programs require more and more money (especially that $700 billion “mortgage” Congress just signed your name to), we expect the IRS to step up its audit efforts accordingly. To help you make sure your deductions are “bulletproof”, we’re preparing a guide that explains exactly what documentation you’ll need in case your return is audited. The guide will be ready mid-December, so be sure to call and get your copy.
Tax season filing deadlines and preparation fee update: To make sure we have adequate time to prepare your tax return accurately and take advantage of all the tax-saving opportunities available to you, we MUST have your tax info no later than February 28 to prepare your corporate return by the original due date and no later than March 31 to prepare your individual return by the original due date. We’ll file an extension for you if you’re not able to get us your info by those dates. Also effective 1/1/09, our new tax preparation hourly rate will be the market rate of $250 per hour. However, if you bring us the info we need to get your tax return finished by the original due date OR your extended corporate return finished no later than 8/31 and your extended individual return no later than 9/30, we will reward you with a 50% discount off that rate. (Please allow 2 weeks preparation time on all returns.)
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