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| 2008 Tax Tips Archive |
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Estimating your tax liability is a balancing act. Pay in too little, and you may face penalties or have to come up with a lump sum in April. Overpay and you crimp your cash flow and miss the opportunity to funnel your money to investments, college savings, or retirement savings throughout the year. Did you take steps to lower your business utility bills this year? Perhaps you upgraded your overhead lighting or added additional ventilation, or a new heating, cooling, or hot water system. You already know the many sound financial reasons for not taking money out of retirement accounts early. Unfortunately, emergencies happen — so you may also want to know the tax consequences if you're forced to consider a withdrawal from your 401(k) account before age 59½. As you prepare to give your employees the required annual disclosure notices for your business's SIMPLE plan, it's also a good time to make sure the plan is compliant with tax requirements. You may think of myths as fables from ancient times, but they exist in today's world too, especially in the realm of taxes. While the economic impact is not yet clear, the recently enacted Emergency Economic Stabilization Act of 2008 contains provisions that remove some tax planning uncertainty. It's no wonder barter transactions sound appealing when your business experiences rising inventory levels or slowing cash flow. Swapping goods and services with other business owners, either through a barter exchange or more informally, can help you move inventory and conserve cash in tough times. You've probably heard that estate taxes are scheduled to disappear in 2010. Whether that will actually happen is anyone's guess. One thing is sure: Leaving your estate plan in limbo until then is not a good idea. Fortunately you can take steps now to protect your loved ones. Has the slowing economy prompted you to turn your hobby into a business or launch an evenings-and-weekends venture? If so, the tax code offers an incentive: a current-year deduction for start-up and organizational costs. If you've ever wondered about the meaning of acronyms you see on those quarterly payroll tax forms your business is required to file, here's a brief guide to decode the jargon. September 1st - Know the terms for making tax-free withdrawals from Section 529 plans As the fall semester approaches, you might be thinking of tapping into your Section 529 college savings plan The weekly wave of economic stimulus payments subsided in July, and so did much of the news coverage. But there have been changes to the program that may benefit you or someone you know. As you might expect, the recently enacted Food Conservation and Energy Act of 2008, also known as the Farm Bill, includes farm-related tax provisions. What's unexpected: You may be eligible for some benefits even if you're not a farmer or rancher. The Housing Assistance Tax Act of 2008, part of the housing bill signed into law on July 28, includes two homeowner-targeted provisions that may benefit you — and one that could hurt. Attention military personnel and employers: In June, President Bush signed the Heroes Earnings Assistance and Relief Tax Act of 2008, which contains tax benefits for service members and others. July 28th - Are you keeping up with tax law changes? Congress has passed at least one major tax law each year since 2001. Have you been keeping up? During tax or financial planning sessions, you may expect to ask lots of questions. What can be unexpected is the number of questions your advisor will ask you — questions that might leave you wondering, why do you want to know that? July 14th - Review your employee reimbursement policy Do you have a policy for reimbursing employees who incur business expenses such as travel, meals, professional dues, and continuing education? Other business expenses. The generic term you see on your tax form may leave you scratching your head. Just what "other" expenses can you legitimately deduct? Due to rising gas prices, the IRS has increased the "standard mileage rate" for business drivers in 2008. June 23rd - Are taxes due when you give a gift? Some gifts are big, others are small — and the Internal Revenue Service expects you to report them all. June 16th - What you may not know about this deduction It's a silent deduction, but valuable, and so common you might forget how complex it can be. What is it? June 9th - Make
the most of your professional advisors Want to save time, taxes, and problems for your heirs? There's a simple document you can complete that will help you do all those things. May 26th - A summer business could create tax issues Are you looking for ways to earn additional money this summer? The extra cash will no doubt come in handy, but it could affect your tax return. May 19th - When to amend prior year tax returns A lot of tax advice focuses on looking ahead. But sometimes looking back is a good idea, despite clichés to the contrary. One reason: Catching errors that could lead to refunds. There are no official statistics, but it's likely the number of financial resolutions made on April 15 is second only to those made on New Year's. When you're in the midst of tax time, trying to get the most benefit from allowable deductions, you can easily see how adjustments to your recordkeeping can save you time and money — and you promise yourself you'll make those changes. April 28th - New law provides tax break for buying business equipment Are you thinking of buying business equipment this year? If so, you'll be happy to know the Economic Stimulus Act of 2008 includes changes to federal tax depreciation rules that can save money on your return. April 21st - It's still tax time after April 15 With so much focus on April 15, it's easy to overlook other tax due dates. But employers, nonprofit organizations, and fiscal-year filers have upcoming reporting requirements that are equally important. April 14th - Put your tax refund to good use Are you looking forward to receiving a tax refund or the stimulus payment that will be arriving in a few weeks? Maybe you're expecting both. By now you know how much you'll be getting and approximately when the cash will land in your bank account. The only question is, what's the best way to put the money to work for you? Warning: Dates on your calendar are closer than they appear. The saying may seem especially true as the due date for your calendar-year 2007 personal federal income tax return approaches. Fortunately, you still have time for last-minute moves before April 15 arrives Whether you're going to college yourself or paying for your child to attend, you're probably familiar with Form 1098-T. Schools send these annual informational statements to report qualified tuition and educational expenses. You might be planning to use the amount shown on the form to calculate education credits or deductions on your tax return. March 24th - Do you qualify for a home-office deduction? Your home. Your office. Are they one and the same? If so, you may be able to take a home-office deduction that can save income and self-employment taxes. March 17th - Itemizing deductions: Three facts you should know You know the general rule about itemized deductions: Compare your total allowable expenses against your standard deduction, and use the amount that provides the greatest tax benefit. March 10th - What if you can't file your business tax return on time? Is March 17 arriving faster than you expected? If you're not ready to file your corporate tax return for calendar year 2007 — and in some cases, even if you are — you may want to request a six-month extension of time. March 3rd - What you need to know about reporting foreign financial accounts "Did you have an interest in or a signature or other authority over a financial account in a foreign country, such as a bank account, securities account, or other financial account?" February 25th - A review of changes affecting your 2007 return With all the tax law changes recently, you may have forgotten which ones affect your 2007 tax return, and which are for 2008 and beyond. February 18th - Tax rebate checks coming this spring Get ready for tax rebate checks expected to begin arriving in May. The checks are the centerpiece of the Economic Stimulus Package Act of 2008, legislation passed in the hopes of increasing consumer and business spending and keeping the U.S. economy from sliding into recession. February 11th - New law provides some mortgage foreclosure relief The acronym is a tongue twister, but the Mortgage Forgiveness Debt Relief Act stands for help if you're a homeowner facing foreclosure. If you're the owner of an S corporation, you might assume health insurance premiums you pay for yourself and your family are a tax-deductible expense. But when you own more than two percent of the corporation's stock, special rules apply — and the IRS says not following them could limit your deduction. January 28th - Be sure to count all your medical deductions Are you examining your receipts, hoping to exceed the 7.5% of adjusted gross income threshold for deducting medical and dental costs? A quick review of deductible expenses and a recent IRS ruling may help. January 21st - IRS releases 2008 retirement account contribution limits Are you maximizing your retirement savings? Because contribution limits can change from year to year, you may not be sure — which means it's time for a quick review. Updating your annual contributions can save tax dollars and keep your retirement plan on track. January 14th - Late tax changes may delay filing If you use the IRS standard mileage rate to reimburse yourself or your employees for the business use of personal automobiles, it's time to update your calculation. Beginning January 1, 2008, the new rate for business driving is 50.5¢ a mile. |
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