What does the stimulas plan mean to the average Joe?

Besides a lot more debt!  Heres the down low:

Making work pay credit – singles get $400, marrieds $800 for 2009 & 2010.  Phase outs begin at $75,000/$150,000 (this means the benefit will start to be reduced or phased out once you hit that income level) and will probably be manipulated through withholdings.  In other words, they will adjust the payroll tax tables, so you will have less withheld. You will get an extra $13 per check.

 Economic Recover payment – $250 one time payment to retirees, disabled and social security recipients.

Refundable credit for government pensioners – one time credit of $250 in 2009.

Unemployment compensation exclusion – Federal (not AZ!) income tax is suspended on the first $2,400.

 Expanded EIC & child tax credits – relief for EIC was provided for families with 3 or more kids and they made it easier to get the child tax credits refundable.

 Education credits – the Hope credit is changed to $2,500 credit available for the first four years, and now includes books.  100% of the first $2,000 and then 25% of the next $2,000 in expenses.  With 40% refundable! Phase-outs begin at $80,000/$160,000

Computers count as an education expense for 529 plans during 2009 & 2010.

Expanded first time credit for first time home buyers (hey – I don’t name them).  For any home purchased between 1/1/09 and 11/30/09 there is an $8,000 credit and it does NOT have to be paid back.  The 2008 credit was for $7,500 credit with a 15 year repayment schedule.  Phase outs begin at $75,000/$150,000.  They also added a ton of flexibility for when the credit is to be shared.

 

 Tax break for new car purchases.  You can deduct sales taxes on a new vehicle (cars, SUV’s, trucks, motorcycles and motor homes) purchase.  Even if you don’t itemize.  However it doesn’t help some one who is already deducting their sales taxes as an itemized deduction.

Energy-efficient existing homes get a larger credit.  The credits are good for 2009 & 2010 and the credit is increased to 30% of the amount paid.  There is a $1,500 cap.  They also removed the caps on wind energy property, solar water heaters and certain heat pumps.

 And of course an AMT patch, so fewer people will get caught paying the Alternative Minimum Tax.

Remember – if you have any questions, just call your favorite Phoenix CPA team!

SO, WHAT DOES THE STIMULAS PLAN MEAN TO A SMALL BUSINESS OWNER?

Extension of bonus depreciation.  New equipment, furniture, fixtures, ect. are still eligible for an ADDITIONAL 50% write off.  This is above Sec 179 (see next item) and regular depreciation.  It’s been extended for any NEW property (not real estate) purchased in 2009.

 

Extension of Sec 179.  In 2008, congress really bumped up the amounts that businesses can use to expense purchases of fixed assets.  Without section 179, assets purchased have to have the purchase spread out 5, 7 even up to 15 years.  Section 179 allows us to expense the assets in the year they are purchased.  These assets can be new or used, and do not have to be paid for.  If you borrowed money to buy a $25,000 forklift, we can expense the $25,000, NOT the actual amount paid for.  The limits for 2009 are expensing up to $250,000 with this limit starting to phase out with total asset purchases for the year exceeding $800,000.

 

NOL (Net Operating Losses) carry backs can go back 5 years!  So a loss in 2008 can be applied to 2003 to get back taxes paid in 2003.  The old law was 2 years.  This is huge to all of you real estate people.

 

Incentives to hire unemployed veterans and disconnected youth.  You can take a work opportunity credit equal to 40% of the first $6,000 of wages paid to employees that fall in the following.  Unemployed veterans released from active duty from 2008 – 2010 AND received unemployment for at least 4 weeks during the year before being hired.  Disconnected youth qualify if they are between 16 and 25 and have not been regularly employed or attended school in the past 6 months.  Terms and conditions apply.

New home purchase get’s an $8000 credit!

This is a big we issue we are seeing in our little Phoenix CPA office.  If you purchase a home between 1/1/09 – 12/1/09 your have scored!  BIG TIME!

You are eligible for up to $8,000 refundable credit (dollar for dollar reduction on your taxes).  Best part is you can take this credit on your 2008 taxes!  If you have already filed your 2008 taxes, then you need to get down to your favorite tax preparer and file an amendment.  Now if you have not filed your 2008 return, and are planning on buying a home before 10/15/09 (the final due date for your 2008 personal tax return), then make sure your accounting firm, prepares an extension.  It’s the fastest, easiest way to get this credit. 

It’s always best to file your return right, the first time.

SURVEY – THANK YOU!

Hey guys,

Hopefully you found my blog via the news letter.  (Rememeber I asked for your help by completing a survey??)  And you said “I want to help my favorite Phoenix CPA, and Phoenix Tax Preparer Alex, make his buisness better. 

It is a really quick survey, and I appreciate you taking the time to do this.  Thank you.  Let me know you did it, and I’ll buy you Starbucks next time your in the office.  Here’s the link:

http://www.surveymonkey.com/s.aspx?sm=vCc1UB6bom3yfAm4bOZHbg_3d_3d

Blog at you soon.

YCDBSOYA

 Do any of you know what this stands for?  It was shared with me by a little old lady who knows how to SELL.  She tried to retire, but when her nest egg was cut in half, it was time to follow the letters above.  It’s the secret for success in this new economy.

  How many of you are refusing to participate in this economy?  I know I am. 

  It’s amazing how many fellow small business owners are making decisions out of fear and doubt.  They seem to fall into three categories.  1) The LONE RANGER – trying to whip this economy all on their own.  2)  The KNOW IT ALL, someone who can’t benefit from hearing new ideas or meeting dynamic people.  3) The CAVE MAN – someone who is going to hunker down and take cover until this stormy economy blows over.  Well, phooey on all of them!

  Personally, I am very excited about my business. Now is the time to be working ON your business, not IN it.  I have managed to position myself so I can work on my business.  And it’s working!

  OK, here’s the secret:

            You

          Can’t

          Do

          Business

          Sitting

          On

          Your

          Ass!

 

We just don’t do accounting in Phoenix, we help you succeed!

It’s not too late to cut your 2008 taxes!

You can accrue salary and bonuses for rank-and-file employees (not owners of 50% or more) and you do not have to pay them until March 16 this year. Other March 16th corporate deadlines:

 12/31/08 corporate returns are due, unless you are filing an extension. We automatically file extensions for all of our clients.

2008 Contributions to pension and profit sharing plans. However filing an extension extends this to 9/15/09. (Now you know why we automatically extend everyone) 

Pay out any C Corp dividends to escape the accumulated earnings tax

File S Company status for 2009 – however there are many exceptions to this rule and it is very easy to file a late request on a new company.

As your favorite Phoenix certifed public accountant  I hope to see you soon.

Gotta love Congress!

Timothy Geitner cheated on his taxes AND now he’s the Treasury Secretary.  When he was being grossly overpaid in a previous consulting job, he was told he would have to pay self employment tax on his earnings.  He said OK, and negotiated an extra allowance to cover the tax.  However he never paid the self employment tax!!! Not until he was audited for the Treasury Secretary job.  Not quite sure how to take that.  I admire his stance, but is that what we need as a leader????  Maybe it is?  This Phoenix CPA is a bit bewildered.

Obama’s stimulus plan

So here go the politicians, leveraging our futures – AGAIN!  Now that we have started preparing 2008 tax returns, we have to deal with the last stimulus plan.  Remember how Bush tried to buy everyone by sending them money last summer?  Well we now have to report how much everyone got.  And you know our members have no idea how much they got.

Seems kind of silly to be giving all these loser companies a bunch of money.  If they want to create jobs, why not give us small business guys a shoot?  we create most of the jobs anyways.  If I had some incentives, I could easily hire 1 or 2 people.  Instead they pump BILLIONS into autos (hey – I’m from Detroit, I get it), with over paid labor, fat & slow management, and bad products.  The business model can not make it.  Maybe they should reduce the self employment tax, that way all these unemployed people will be able to start their own businesses.

Another idea would be to remove the passive income rules.  Let the people with money invest in real estate.  By removing the passive losses, they will be able to deduct the losses.  They’d pay less in taxes and would use that money to buy more real estate.  Hmmmm.

Anyways that’s just this humble Phoenix CPA’s opinion.

So what is Obama going to do with Taxes?

Man, don’t you hate typo’s?  I was just reviewing my last post, and saw I spelled the presidents name wrong!  Oppps!

So a couple of other tax things that have been getting a ton of press lately.  What is going to happen to the estate tax?  It has been scheduled to go away for 2010 and then come back to the original (teeny tiny exemption) amount in 2011.  Best guess is they will keep the 2009 levels.  3.5 million exemption per person.

There has also been talk of making the AMT (alternative minimum tax) go away.  Are you kidding?  Have you seen the tab the drunken politicians have left us?  There is no way the AMT will be repealed.

We have been hearing from ALOT of people about the debt forgivenss issues.  We have prepared a letter that explains everything.  So if you need a copy, just harass your favorite Phoenix income tax firm.  Call the office at 602-943-4494 for a free copy.

Don’t file YOUR taxes too early…

This year the IRS changed the dues dates of it’s 1099′s.  The do not have to be mailed until February 17, 2009.  In the past they were always due January 31.  There is nothing worse then calling your phoenix tax guy and asking them, “I just got this form in the mail, does it change my taxes?” and we have to file an amended return.  Good for the CPA, because they get to charge you for an amended return, but bad for the taxpayer, because now they have to wait for any more refunds.  Plus amended return have a higher audit risk. 

It’s always better to do it right the first time. So show some patience and make sure you get ALL your documents.  We will see you soon.