2009 December | Taxes Advisory

1,000 New HIRE Tax Credit

27. December 2009 · Write a comment · Categories: General Tax · Tags: 1000, Credit, Hire

The Hiring Incentives to Restore Employment (HIRE) Act became law on March 18, 2010. Its purpose is to stimulate employers to hire more employees and, thus, reduce the unemployment rolls. It provides significant tax benefits to non-governmental employers in the form of a payroll tax exemption and up to a ,000 tax credit for each qualified new hire.

How Do Employers Qualify?

The HIRE Act provides up to a ,000 tax credit to employers who retain new hires for a 52 consecutive-week period.

How Do Employees Qualify?

The payroll tax exemption only applies to the wages of a newly hired individual who:

Was hired by the employer after February 3, 2010, and before January 1, 2011;
Has certified by signed affidavit, under penalty of perjury, that he/she has not been employed for more than 40 hours within the 60 days prior to the hire date;
Has not been hired to replace any current employee unless that current employee;
Separated from the employer’s service voluntarily, or was terminated for cause; and
Does not own more than 50 percent of the employer or is not related to, or otherwise affiliated with, anyone who is an owner.
How Much Can You Get?

The ,000 is provided in the form of a tax credit. Whereas tax deductions only serve to reduce your taxable income (or give you a much smaller percentage of economic benefit), a tax credit will pay you the full amount.

The tax credit is limited to ,000. The tax credits will be received when you file your 2011 Federal Income Tax Return.

Is the ,000 tax credit limited?

Yes, to receive the full amount of the ,000 credit, the new hire’s wages for the period must exceed around ,000. If the wages are less than this amount, the credit received by the employer will be equal roughly 6% of the wages earned during the 52-week period. Furthermore, to qualify for the credit, the new hire’s pay for the second half of the 52-week period must be at least 80 percent of the pay provided in the first half.

Finally, employers who qualify for this payroll tax exemption cannot also earn the Work Opportunity Tax Credit.

Consult your tax professional to see how this can work for you!

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How Can I Qualify For A Mortgage Tax Deduction?

26. December 2009 · Write a comment · Categories: General Tax · Tags: Deduction, Mortgage, Qualify

When buying a home there are many tax benefits you can take advantage of, including a mortgage tax deduction. Besides a real estate deduction, a mortgage tax deduction can be a great benefit. The only main qualifier for the tax deduction is that the amount, including for the primary and any second residence is less than .1 million.

Something that needs to be considered when trying to qualify for a mortgage tax deduction is that any home loans before October 14, 1987 are exempt from the previously mentioned limit. Loans that were taken out before this date can qualify under the tax reduction no matter what the size of the loan. Also if the loan was taken out before this date it can qualify for the deduction no matter what the use of the loan was for.

When it comes to the mortgage tax deduction there are some advantages in terms of the total acquisition indebtedness as well. First of all let’s explain what the total acquisition indebtedness is. It is the money that you borrow to buy, build or improve on your home. Basically the same rule applies to qualify in this matter. Any one that was taken out after October 14, 1987 can only be allowed up to .0 million, where those who took one out before have no limit.

An interesting fact in regards to home loans and what could effect your qualifying of the mortgage tax rebate is that you can borrow up to 0,000 of the equity of your house and use it any way you’d like. In this instance, if you bought before 1987 you will not get a better in deal in this matter. Since if you did buy before 1987 if you borrow on the equity you can only use the money for home improvements.

One new thing that has happened in the instance of mortgages and tax deductions is that is no longer allowed to borrow with no limit. This means you can no longer borrow on your equity with not limit and benefit by using it for whatever you want. This also excludes you from making unlimited deductions on any equity you may have borrowed upon.

Another new thing that perhaps is a good thing is in regards to being able to draw on your equity like a credit card. There is a limit on it now but they can borrow when they need to, without all the hassle of taking out specific loans and the ensuing paperwork. This type of loan can qualify in terms of a mortgage tax deduction.

Being able now to fully understand what types of loans and mortgages that can qualify you for certain deductions can help you best take advantage of any benefits related to tax breaks. Having the option of a tax rebate can greatly increase your chances of saving money.

Get Cash Back For Going Green

25. December 2009 · Write a comment · Categories: General Tax · Tags: Back, Cash, Going, Green

Going green can be less expensive than you think when you take into account some of the cash incentives being offered for those who build and remodel with greener alternatives than the conventional choices. Right now, alternative energy sources and the equipment needed to use them are in the early adopter stages, when costs are higher for all concerned. That’s because the early adopter costs include development and deployment costs. In order to encourage more people to jump on the bandwagon, utility companies and governments are offering rebates and incentives to those who are willing to be part of the brae new world of greener resources. These are just a few of the programs and incentives that might be out there for you.

Federal Tax Incentives

On the federal level there are a number of programs that offer incentives for going greener in your home. Many of these are aimed at corporate taxpayers rather than residential ones, but there are some that offer incentives available to home owners.

Tax exclusion

Any income from rebates for energy efficient conversions is excluded from taxable income. If, for instance, you receive a 0 rebate from your gas company because you installed a new tankless water heater, you do not need to count that 0 into your taxable income. (Exclusions reduce the income on which you are taxed.)

Tax Credit for Energy Improvements

You can get up to 0 tax credit for making energy efficient improvements to your home, including repairs and remodels. The credit amount is determined as 10% of the cost of building envelope improvements and/or 10% of the cost of more efficient equipment, including water heaters, furnaces, windows, doors, roofs, air conditioners, circulating fans, building insulation, heating pumps and circulating fans. (Credits are deducted from the amount of tax you owe.)

Tax Credit for Solar Energy Installations

You can get a tax credit equal to 30% of the cost of solar energy installations, including solar water heat, photovoltaic systems and solar fuel cells, up to a total tax credit of ,000 for electric and solar water heating, and up to 0 per .5 kW for fuel cells. The credit can be carried forth to succeeding years. This one expires at the end of 2008.

In addition, there are incentives for residential builders for meeting conservation goals that can return ,000 to ,000 in rebates for each residence built that meets specific guidelines.

State Tax Credit

Since 1997, Florida has exempted renewable energy systems from state sales and use tax. Renewable energy systems include any system that uses solar, wind or other renewable energy sources instead of more conventional power sources like electricity, gas or oil. The products or systems that you can get a tax rebate or credit for include alternative energy cars, solar space heaters, solar water heaters, solar pool heaters, photovoltaic systems, refueling systems, ethanol and biodiesel. If you refit your car to use an alternative to conventional gas or diesel, you can get a return of any tax that you paid on it. The same goes for replacing your conventional pool heater with a solar pool heater, or installing a tankless solar water heater.

State Rebate Program

In addition to the tax rebate, you may also be eligible for a Florida rebate program if you install a solar hot water heater, solar pool heater or photovoltaic electricity cells before June 20, 2010. The rebates include 0 for solar water heaters, 0 for solar pool heaters and a pro-rated amount for photovoltaic (PV) systems with a maximum amount of ,000 for residential installations and 0,000 for non-residential installations. The amount is dependent on the wattage rating of the system.

You can get more information about Florida state rebate and incentive programs at the Florida Department of Environmental Protection web site.

Utilities Pitch In with Rebates

In nearly every area of the country, the major utilities offer some sort of rebate or other incentive to encourage their customers to move toward greener equipment. Here in the Tampa area both Tampa Electric and People’s Gas offer rebates when you replace your existing equipment with more energy efficient equipment in your home.

Tampa Electric offers rebates when you replace your heat pump with one that works more efficiently. The rebates range from 0 to 0. In addition, because a great deal of energy is lost when air seeps out of leaky ducts or broken seals, Tampa Electric offers home ductwork inspections for . The flat rate includes any repairs and the installation of one flexible duct up to 25 feet in length. In addition, they’ll pay you up to 0 when you install ceiling insulation. All of these are recommended measures for reaching maximum energy efficiency in your home. Finally, if you’re building a new home, you may qualify for even more rebates and incentives.

Find out more about Tampa Electric rebates at their Energy Plus website page.

People’s Gas also offers rebates and incentives to customers who upgrade their current equipment to more efficient versions. The rebates are available when you replace your current water heater, heating system, cooling system, cooking appliances, clothes dryer and space heaters with more energy efficient gas appliances. The rebate amount varies according to the appliance or system, and whether your convert from electricity or upgrade from an existing gas appliance. In addition, People’s Gas also offers rebates to builders doing new construction, which can lower the cost of your home if you’re building new.

Learn more about residential rebates at People’s Gas website, on the Residential Conservation Page. Learn more about builder rebates at People’s Gas website, Builder Conservation Page.

Most other utility companies throughout the country offer similar incentive programs. Check with your electric and gas providers to find out what rebates are available to help you with the expenses of going greener.

New Tax Legislation Could Save Dentists $$thousands$$ in 2008

25. December 2009 · Write a comment · Categories: General Tax · Tags: $$thousands$$, 2008, Could, Dentists, Legislation, Save

Have you thought about upgrading your equipment to the newest industry standards but were afraid of the cost? Or perhaps you want to improve your office to make it more comfortable for your patients? Do you need to upgrade your reception area to make it more efficient for your administrative staff or look nicer for your patients?

If you have been thinking about any of these improvements for your practice, consider that if you do it in 2008, the Government will help pay for them. That’s right, Uncle Sam is ready to pay for a significant part of your cost of improvements, but only if you make your purchases and do your improvements in 2008. How? The good old American way – through major tax deductions.

In February 2008, President Bush signed into law the Economic Stimulus Law of 2008. Most people think of this as the bill that gave millions of Americans a tax rebate check of 0-,200. You may not have been eligible for this benefit because your income was too high, but other parts of this legislation could be worth far more to a dentist than a small rebate check.

There are two parts of this legislation that could be particularly lucrative to you in 2008. First, there is the change to the Section 179 rules. Most of you know that if you buy new equipment then you can elect to deduct the full cost of this equipment up to certain limits. What you may not know is that these limits were increased substantially for equipment purchased and placed into service in 2008.

There are two limits that increased as part of the 2008 Tax Act. The first is the total amount of equipment that can be deducted in a single year. The rule is 5,000 for years before and after 2008. But, for 2008 only, the limit has been increased to 0,000.
And the deduction is not limited to equipment. It also applies to computer software and to certain leasehold improvements.

The second limit that was increased is the maximum amount of equipment you can buy and still get the Section 179 deduction at all. Before and after 2008, you only get the deduction if you buy less than 0,000 of equipment during the year. For 2008, this has been doubled to 0,000. What does this mean to you? If you are setting up a new office or multiple offices, you may have been disallowed ANY Section 179 deduction if you purchased more than 0,000 of equipment. With this limit doubled, most dentists will be able to deduct all of the equipment they buy in 2008 up to the increased 0,000 limit.

In addition to the changes to the Section 179 deduction, there is more good news for those of you expanding or renovating your offices. As you may know, Section 179 only applies to tangible personal property (i.e., equipment and furnishings). So what about all of those improvements to the office itself? Any benefit there? Absolutely!!!
The 2008 Tax Act allows a bonus deduction for depreciation on certain property equal to 50% of the cost. And you still get to depreciate the other 50% of the cost of the property over the normal depreciation period. Let me give you an example.

Suppose you decide to renovate your office in 2008. You buy new equipment for 0,000, new furniture for ,000 and make leasehold improvements to the office of ,000. If you get this all done in 2008, your current tax deduction will be in excess of 0,000. If you wait until 2009, you will only get a deduction in 2009 of about 8,000. The different of ,000 would have to be depreciated over future years.

One more benefit from this new law should not be overlooked, and that’s the additional depreciation you can take on business vehicles placed in service in 2008. Because of the “luxury auto” limitations, depreciation deductions for automobiles are severely limited. But in 2008, the limits are increased by ,600. Nothing like the increases in Section 179 or bonus depreciation, but still a nice additional benefit for 2008.

Now for the really important part of this story. What should you do? Should you spend the money? ONLY IF IT MAKES SENSE FOR YOUR BUSINESS!!! I never recommend spending money just for a tax benefit. After all, the maximum tax rate is on 35% and even with a state rate of as much as 11%, you still lose money if all you are getting is a tax deduction.

On the other hand, if you are planning to make improvements to your office and/or equipment in the next year or two, it might make sense to do it in 2008 so the Government can underwrite a substantial portion (35-50%) of the cost.

I strongly recommend you meet with your tax advisor before undertaking any tax planning. I especially recommend to our dentist clients that they work with their tax advisor to formulate a COMPREHENSIVE, LONG-TERM TAX STRATEGY.

Disabled Veteran Tax Credits

25. December 2009 · Write a comment · Categories: General Tax · Tags: Credits, Disabled, Veteran

Of course, when it comes to taxing and credits, everyone is at an advantage given that they meet the requirements. For veterans that have given a service for their country, these benefits are even more important and that’s why the Federal government recognizes the disabled veteran tax credits. This helps them to counter the many taxes that have to be paid from state to state so that they will be able to lead comfortable lives despite their own disadvantages.

Now, this is not the same as a disabled person’s tax credit. People who are qualified for disabled veteran tax credits need to be a veteran who was disabled while serving the armed forces. In other cases, the disabled veteran tax credits are given to the spouse and child under 18 years of age of a disabled veteran or of a member of the armed forces who was killed while on duty. Tax exemptions come in different amounts for the disabled veteran and it really depends on the disability. The amounts can range anywhere between 00 and 000.

There only way to apply for this kind of tax credit is to complete Applications for disabled veterans or a survivor’s exemption form. There is also a deadline for the filing of these documents and this is between January 1 and April 30 of the tax year. A disabled veteran’s exemption can be filed up to one year from the delinquency date also.
Remember that disabled veterans tax credit exemptions vary from state to state so you will need to contact local offices to find out all the details according to your disability and properties. In some states, age restriction has also been lifted so that people can get their benefits no matter what age they are as long as they qualify for the tax credit program.