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!