Troy Van Sloten, CPA

Tax-Free Provisions for Mortgage and Debt Relief Workouts

If the decline in the real estate market or the nation’s economic downturn has caused you to lose your home by foreclosure or short sale, or you voluntarily signed the deed over to the lienholder, you will probably be faced with debt relief income.

---

New and Old Favorite Deductions Extended

The Economic Stability Legislation that was passed into law on October 3, 2008 included several individual bills that Congress had before them.

---

Strict Documentation Rules for Charitable Contributions

Do you have plans of making a cash contribution to your favorite charity or donating some items that are sitting in your garage or basement?  If so, make sure that you are aware of the new requirements that apply to charitable contributions.

---

Energy Tax Incentives for Businesses

Part of the Economic Recovery Act passed in October extended two energy-related provisions for businesses and added a tax-free employee benefit.  Here is a rundown on those provisions.

---

Independent Contractor vs. Employee

Are your workers independent contractors or employees?  The answer can have a profound impact on how much tax you will pay as a small business owner.  Depending on whether or not your workers are considered employees, it will affect the amount of taxes that must be withheld from their pay, how much additional cost your business must bear, the documents and information that must be provided to you, and the tax documents that must be given to them.

---

Reminder – Single Member LLCs

Under the disregarded entity rules, certain single-owner limited liability companies (LLCs) are disregarded as entities separate from their owners for tax purposes.  As a result, the disregarded entity is ignored and its property and activities are treated as those of the owner of the entity.  In the past, single-owner LLCs with employees could file their employment tax obligations using their individual tax ID number or under the ID number obtained for the LLC’s employment reporting obligations.

---

A Little Help for Your Friends

In these troubling financial times, many individuals are struggling to do their own taxes.  Some need guidance with their tax and financial issues, while others would like to take advantage of the vast number of new tax benefits available in 2008 and subsequent years.

---

Advanced Lean-Burn Technology Vehicle Credits

The Internal Revenue Service has acknowledged the certifications by manufacturers that certain advanced lean-burn technology vehicles qualify for the alternative motor vehicle tax credit.

---

Home Energy-Efficient Credit

The credit for certain energy-efficient property installed on the taxpayer’s principal residence that originally expired in 2007 has been reinstated for 2009 only.

---

Education Related to Business

A business deduction is available for education that maintains or improves the skills related to a person’s trade or business.  Educational costs are also deductible if the education is required (e.g., by law) to maintain a business. 

---

Overcoming Business Expense Limits

A major tax break for small businesses is the ability to write off the cost of machinery and equipment used in the business in the year of purchase rather than writing off the cost over a period of years (usually five or seven) via depreciation deductions. 

---

Use Closing Date to Protect Prior Year Data

You’ll likely be closing the books on 2008 soon and your records will become the basis for your tax return. It’s critical that your QuickBooks records for a given year match the corresponding tax return, so consider setting a closing date in QuickBooks so that no one inadvertently changes the supporting documents for your tax return.

---