John M. Hoffman & Associates CPAs
Tax News
Latest news - updated November 24, 2009
The first time home buyers credit has been extended through April 30, 2010 and a new credit for existing home owners who buy a new home has been added.
A real opportunity for 2009 is in the area of energy credits. Be ready with your information as up to $1,500 in your pocket for things like insulation, storm windows, new heating systems, etc is there. Even more for solar hot water or photovoltaic (electricity generated by solar panels).
Update July 4 2009
Shortly after his inauguration, President Obama signed the
“American Recovery and Reinvestment Act of 2009".
Noteworthy items include:
Making work pay credit – this credit of up to $400 ($800 for married couples) is essentially a rebate of the social security tax on the 1st $6,450 of earnings. This credit applies for tax years 2009 and 2010. Like most tax reductions, this credit is phased out for taxpayers above a certain earning threshold.
Enhancement of First-Time Homebuyer Tax Credit – the new $8,000 credit does not have to be repaid and may be available for qualified taxpayers making a first time home purchase between January 1, 2009 and November 30, 2009.
Energy credits are brought back for 2009 through 2010. The credit is larger (up to $1,500) for energy efficiency expenditures for your existing principal residence.
Enhanced education credits, continuation of bonus depreciation and expensing of asset purchases, exclusion of the 1st $2,400 of unemployment benefit from taxation, and many more things.
http://tax.cchgroup.com/Legislation/House-Senate-Recovery-Act-2009.pdf Links you to CCH’s “Special Report” on this tax act.
Previous buy recent tax legislation:
"Housing Assistance Tax Act of 2008"
Not too well publicized mid summer tax package with not too much substance.
Noteworthy items include:
First time homebuyer credit (not too exciting as the homebuyer has to pay the money back and the adjusted gross income limit is $150,000 to $170,000 for a married couple. We don't get too excited about additional loans (even interest free from the government) for first time home owners. Most of them have well enough debt.
Property tax deduction for non-itemizes. This is sort of neat for someone like a senior citizen who owns their home but does not itemize (perhaps they don't have a mortgage). This provision allows a larger standard deduction if the non-itemizer has real property tax payments.
Reduced home sale exclusion will prevent (prospectively) a taxpayer from moving into their highly appreciated rental or vacation property for two years, selling the property at a sizeable gain and then excluding that gain under the principal residence exclusion. The new rule will force taxpayers (prospectively) to prorate gain on sale between periods of nonqualified (rental or vacation) use and periods of qualified principal residence use.
http://tax.cchgroup.com/legislation/2008-Housing-Assistance-Act.pdf?cm_sp_o=1wTblkzfbBE%20VzTwCjCZBAlw%20Vzllwl%20ftw%20ZBAlbET%20-llblfzEgw%20az0%20-gf%20Bu%20niioCjCaw0f%20kbE Links you to CCH's "Special Report" on this tax act.
"Economic Stimulus Package" also known as "Where's My Rebate"?
Please note that there have been some processing errors of the economic stimulus checks, particularly the IRS failure to include amounts for dependent children in the rebate checks. The IRS is aware of this and hopes to have this problem remedied in July of 2008. This requires no further action on the taxpayer part.
Economic Stimulus Package
This legislation is intended to "jumpstart" the economy with the advance tax credits and billions of dollars sent out to taxpayers. Many view this as George Bush's gift to Walmart where much of it will undoubtedly end up. This package also increases depreciation for small businesses.
http://tax.cchgroup.com/legislation/2008-stimulus-package.pdf Links you to CCH's "Special Report" on this tax act.
2007 Year End Tax Legislation "The AMT Patch"
Tax Increase Prevention Act of 2007
This legislation addressed a "rollback of AMT exemption amounts and instead gave AMT exemption amounts that are slightly larger than 2006 amounts. The AMT is still alive and well but at with this legistlation fewer people will be subject to this tax and many subject to this tax will pay less.
http://tax.cchgroup.com/legislation/2007-year-end.pdf Links you to CCH's "Special Report" on this tax act.
Small Business and Work Opportunity Act of 2007
The item within this legislation that impacts more of our clients than any other is the change to the "Kiddie Tax" rules. Effective for years beginning after May 25, 2007 the age limit for kiddie tax is raised to all children under age 19 and students under are 24. The impact of this legislation is to negate much of the tax planning opportunity of gifting appreciated securities to children who could turn around and sell these appreciated securities (perhaps to use for college tuition) and pay very little capital gains tax in their own bracket.
This change in legislation makes the use of section 529 college savings plans even more of an excellent choice.
Most of the other provisions (in our opinion) effect only a small number of taxpayers.
http://tax.cchgroup.com/legislation/2007-small-business-work.pdf Links you to CCH's "Special Report" on this tax act.
Keep posted for future changes as we want to keep everybody up to date. If you see something you think merits consideration on this page, please email it to jhoffman@hoff-man.com.
