July 2008

What's New in Taxes

Summer tax moves

7/1/2008 -

* Your vacation home. If you have vacation/rental property, you might increase your tax deductions by adjusting the number of days you use your vacation home.

* Day camp. If you and your spouse work, the cost of sending your children to a summer day camp may qualify for the child care credit.

* Business entertaining. Summer is a good time to do business entertaining. Keep records of the cost, the date, the attendees, and the business purpose. Your tax deduction is limited to 50% of the cost.

* Hire your children. Put your children to work in your business this summer. A reasonable wage paid for legitimate work is a business deduction.

* Estate taxes. The estate tax is still with us. Make time this summer to create or update your estate plan as part of your overall tax-reduction efforts.

* Kiddie tax. Consider your options if the "kiddie tax" will affect your children this year (up to age 19; to 24 for full-time students).

* College fund. Now that the tax benefits of Section 529 plans have been made permanent, investigate their suitability in building a college fund for your children.

* Summer driving. Keep track of tax-deductible summer driving. The IRS has just increased the standard mileage rate for business, medical, and moving driving. For the last six months of 2008, the business mileage rate has been increased to 58.5 cents a mile. The rate for medical or moving costs has been increased to 27 cents a mile. The rates for the first six months of 2008 (January 1 through June 30) remain at 50.5 cents for business and 19 cents for medical and moving. The rate for charitable driving remains at 14 cents a mile for all of 2008.