Congress has extended the first time home buyer credit to homes purchased before May 1, 2010. It also allows home buyers who have owned the same home for 5 consecutive years during the previous 8 years to get up to $6,500 in tax credits if they purchase the new home after November 6, 2009 and apparently before May 1, 2010. Note, the law does not require you to sell your old personal residence. If you do sell your old residence, you still qualify for the tax free gain of up to $250,000 for individuals and $500,000 for married filing joint.
The purchased home cannot exceed $800,000 for either first time home buyers or those who have owned a home the requisite 5 years. The credit phases out if you make too much money, $145,000 for individuals or $245,000 for married tax payers.
Please check with us to make sure you are eligible for the credit as individual tax situations vary.
This is the time of year when we are thinking about holiday gifts for our employees. Yes, there rules about what and how you can give employees gifts. If the gift is of low monetary value, like a turkey, then you can simply give the gift and all is well. Be careful not to give such gifts frequently, or the total value has to be added to their gross payroll. If you choose to give a larger value item, a gift certificate or cash, the IRS rules this additional payroll, subject to all payroll taxes and withholding. Therefore, please check with us before you do your holiday gifting to your employees.
With these difficult economic times many are learning the downside of borrowing money. Debt payments are due whether or not you have the income to pay them. This is why I have always encouraged people to keep debt as low as possible and pay it off as quickly as possible. It is smart to pay off the highest interest rate debt first, then move on to the lower interest rate debts. Those who have kept debt low are sufferring far less than those who didn’t. In addition, those who had low debt can borrow money, now, when they need it most, while others have exhausted their credit limits.
This advice is a bit late for some, so if you’re looking for a business loan, it behooves you to keep your personal expenses separate from your business checking account and credit cards. Write yourself a check for your salary or distributions, then pay your bills out of your personal accounts. This keeps your books clean and easier for a banker to evaluate. Look into SBA loans which are currently offering some great deals.
Secondly, contact your lenders to see if you can get more favorable terms to help you get through these hard times. It never hurts to ask, and most companies would rather get less money than none at all. Contact your other vendors as well to see about extended payment plans to help even out your cash flow. Take a good hard look at your business’s future before you put your house and retirement savings on the line.
For the future, build a savings account, so you have the money for those surprise expenses. Set up lines of credit when things are solid, so it’s there when things are shakey. Be frugal with your purchases, always look for the best deals, be sure you are buying something you need versus something that looks cool. If you can get it used or refurbished and it still meets your needs, you can save a lot of money this way. Frugal is different from cheap in my mind. You need quality equipment to do your business efficiently, you just want the best deal for that equipment.
For tax deductibility purposes, paying for potentially deductible items with a credit card is the same as paying with cash or check. This even works for charitable contributions. So, if you are worried about owing taxes near year-end, consider accelerating some deductions by paying via credit card.
It’s time to think about your tax situation. There is still time to accelerate deductions into 2009, fund retirement accounts, rebalance your portfolio and various other possibilities. Contact us for a tax projection and planning meeting.
Each state has its own laws regarding taxation of individuals and entities doing business in that state. This includes registration requirements, collection of sales tax, payment of use tax, business licenses and payment of income tax. In addition to the state’s rules, some municipalities and counties have additional tax and license requirements. It is very important to check with the state before doing business within its borders to be sure you are in compliance. There are differences state by state as to what qualifies as doing business in their state. You could be quite surprised to find that your business activity qualifies as such in another state. All of the states have websites, at the very least check those before engaging in business there.
The Making Work Pay Credit resulted in decreased amounts being withheld from paychecks and, in some cases, pension checks. While this has increased your take home pay, it is possible you will unexpectedly owe taxes on April 15th. To help determine if you will be in for this unpleasant surprise, the IRS has added a calculator to its website at http://www.IRS.gov. Wait for the picture of the retired man to show, then click on the link for either Witholding Rates for Pensioners or Check Your Withholding. The people most at risk are those who have multiple employers, both spouses work, those who are claimed as a dependent on someone else’s return, and those pensioners who received the $250 stimulus rebate.
For those who have additional income beyond paychecks and pension checks, it is a good idea to come in for a tax projection. We will estimate your tax situation for the year and compare that to the amount being paid in through either withholding or estimated taxes. Then you can adjust your withholding or estimate payments accordingly.
The extended window to carry back net operating losses closes with the extension deadlines which are approaching quickly. Calendar year business entity returns must be filed by September 15th and sole proprietorships by October 15th.
Partnership returns and Corporate returns for calendar year-end 2008 which are on extension must be filed by September 15th. This is a new deadline for partnerships which used to enjoy a longer extension time.
Washington is discontinuing resale certificates. To be replaced with a Reseller’s Permit. The permit must be applied for at the state. Applications will be available in September. Follow this link for the news http://dor.wa.gov/Content/FindTaxesAndRates/RetailSalesTax/ResellerPermit/default.aspx Some businesses will be automatically sent new reseller’s permits in September. Others will need to apply for it. The old resale certificates expire the end of 2009.
