WHITTIER, CA--(Marketwire - May 16, 2008) - Pop N Go, Inc. (OTCBB: POPN), a leading manufacturer of healthy snack vending machines, is pleased to announce the renewal of its underlying utility patent on its award winning popcorn vending machine. Pop N Go's patent, with the continued payment of maintenance fees to the United States Patent Office, will remain in force until the year 2018 and will provide the Company the right to exclude others from making, using, offering for sale, or selling or importing popcorn vending machines using Pop N Go's patented technology until 2018.
"The recent surge in demand for our machines which produce a single cup of freshly popped popcorn on demand makes the protection of the Company's intellectual property rights all the more important, especially as we intend to develop other machines using our core technology. We believe the demand for healthy snack products, freshly made and not prepackaged, will continue to grow as consumers continue to become aware of the importance of healthy eating," said Mel Wyman, Pop N Go CEO.
Monday, May 19, 2008
Pop N Go Renews Popcorn Machine Patent
Tuesday, May 6, 2008
Section 179 Deduction
(Updated For 2008 Economic Stimulus Act)
Most new business equipment can be either depreciated over its useful life or expensed immediately under Internal Revenue Code Section 179. The maximum deduction is based on the following schedule for the date in which the tax year begins. Each 1040, whether Single or Joint, is limited to one maximum. 179 expenses passed through via K-1s from partnerships (1065), S-corps (1120S), or trusts (1041) are limited at the 1040 level to the one maximum amount. A C corp is able to deduct its own 179 expenses in addition to what is claimed on the 1040s of the owners. This is one of the many ways in which C corps can save thousands of dollars in taxes over S corps.
The following table is of the Federal maximums. Many states have not matched these amounts and have much smaller allowable deductions. In those cases, it is critical to maintain two sets of depreciation schedules; one for IRS and another for the State. Since the basis of an asset may be different for each tax agency, the gain or loss on its disposal will similarly be different.
2002 - $24,000
2003 - $100,000
2004 - $102,000
2005 - $105,000
2006 - $108,000
2007 - $125,000
2008 - $250,000
2009 - $128,000 + COLA
2010 - $128,000 + COLA
2011 - $25,000
For 2004 through 2010, the annual amounts are to be adjusted for inflation. Up until recently, the Section 179 election was only allowed on originally filed tax returns. People who overlooked it were not allowed to claim it on amended returns. This new law allows the Section 179 expensing election to be claimed or revoked on amended returns for 2003 through 2010.
Qualifying Property
Generally, the types of business equipment that qualify for this expensing election are the same kind that qualified for the now-defunct Investment Tax Credit. Most movable assets qualify. Permanent structures do not qualify. Business vehicles with a gross vehicle weight over 6,000 pounds qualify for the full Sec. 179, while lighter vehicles have a much lower dollar limit.
One of the most common questions I am still receiving is whether the Section 179 expensing election is only available for the purchase of brand new assets or whether things such as used vehicles qualify. The answer is still the same. The asset just has to be new to you. You can claim the deduction for items purchased from anyone other than yourself or an entity controlled by you, such as a closely held corporation.
As of October 22, 2004, the maximum amount that can be claimed for SUVs weighing between 6,000 and 14,000 pounds is $25,000. The remaining $77,000 can be used for other kinds of business equipment, including vehicles weighing more than 14,000 pounds.
To be eligible for the Section 179 deduction, the asset must be used at least 50% for business in the first year it is placed in service. The cost eligible for the deduction is the business usage percentage.
Here are more details on qualifying and nonqualifying property, courtesy of the indispensable QuickFinder reference book.
Qualifying Property:
• Tangible personal property (such as machines, equipment,
furniture).
• Certain other tangible property used for specified purposes.
• Single-purpose agricultural or horticultural structures.
• Certain storage facilities.
• Railroad gradings or tunnel bores.
Some examples of qualifying property from the Depreciation QuickFinder Handbook:
• Airplanes.
• Automobiles.
• Billboards (if movable).
• Cattle—dairy or breeding.
• Citrus trees.
• Computers.
• Emus.
• Fruit trees.
• Gas storage tanks.
• Goats—breeding or milking.
• Greenhouses.
• Helicopters.
• Horses.
• Macadamia trees.
• Machinery and equipment.
• Mink and other fur-bearing animals.
• Office equipment—copiers, typewriters, fax machines, etc.
• Office furniture—desks, chairs, file cabinets, book shelves, etc.
• Off-the-shelf computer software.
• Oil and gas well and drilling equipment.
• Orchards.
• Ostriches.
• Printing presses.
• Refrigerators.
• Sheep—breeding.
• Signs.
• Sport Utility Vehicles (SUVs).
• Storage facility (e.g., peanut, hay, potato or tobacco).
• Store counters.
• Testing equipment.
• Tractors.
• Trailers (movable).
• Trucks.
• Vineyards.
• Water wells.
Nonqualifying Property:
• Property held for the production of income
(investment property, most rentals).
• Real property, including buildings and
their structural components, air
conditioning and heating units.
• Property acquired by gift, inheritance
or trade.
• Property purchased from certain related parties.
• Controlled group to controlled group transactions.
• Property used outside the United States.
• Property used in connection with furnishing lodging.
• Property used by tax-exempt organizations and governmental units.
• Property used by foreign persons or entities.
• Property held by an estate or trust.
• Property used by a passive activity.
• Intangible property (including computer software).
Some examples of non-qualifying property from the Depreciation QuickFinder Handbook:
• Air conditioning units.
• Barns.
• Billboards (if not movable).
• Bridges.
• Buildings.
• Docks.
• Elevators.
• Escalators.
• Fences.
• Foreign used property.
• Heating units.
• Investment property.
• Land.
• Landscaping.
• Leased property.
• Rental property.
• Roads.
• Shrubbery.
• Sidewalks.
• Stables.
• Swimming pools.
• Trailers (nonmobile with wheels detached and permanent utilities).
• Warehouses.
• Wharves.
Most new business equipment can be either depreciated over its useful life or expensed immediately under Internal Revenue Code Section 179. The maximum deduction is based on the following schedule for the date in which the tax year begins. Each 1040, whether Single or Joint, is limited to one maximum. 179 expenses passed through via K-1s from partnerships (1065), S-corps (1120S), or trusts (1041) are limited at the 1040 level to the one maximum amount. A C corp is able to deduct its own 179 expenses in addition to what is claimed on the 1040s of the owners. This is one of the many ways in which C corps can save thousands of dollars in taxes over S corps.
The following table is of the Federal maximums. Many states have not matched these amounts and have much smaller allowable deductions. In those cases, it is critical to maintain two sets of depreciation schedules; one for IRS and another for the State. Since the basis of an asset may be different for each tax agency, the gain or loss on its disposal will similarly be different.
2002 - $24,000
2003 - $100,000
2004 - $102,000
2005 - $105,000
2006 - $108,000
2007 - $125,000
2008 - $250,000
2009 - $128,000 + COLA
2010 - $128,000 + COLA
2011 - $25,000
For 2004 through 2010, the annual amounts are to be adjusted for inflation. Up until recently, the Section 179 election was only allowed on originally filed tax returns. People who overlooked it were not allowed to claim it on amended returns. This new law allows the Section 179 expensing election to be claimed or revoked on amended returns for 2003 through 2010.
Qualifying Property
Generally, the types of business equipment that qualify for this expensing election are the same kind that qualified for the now-defunct Investment Tax Credit. Most movable assets qualify. Permanent structures do not qualify. Business vehicles with a gross vehicle weight over 6,000 pounds qualify for the full Sec. 179, while lighter vehicles have a much lower dollar limit.
One of the most common questions I am still receiving is whether the Section 179 expensing election is only available for the purchase of brand new assets or whether things such as used vehicles qualify. The answer is still the same. The asset just has to be new to you. You can claim the deduction for items purchased from anyone other than yourself or an entity controlled by you, such as a closely held corporation.
As of October 22, 2004, the maximum amount that can be claimed for SUVs weighing between 6,000 and 14,000 pounds is $25,000. The remaining $77,000 can be used for other kinds of business equipment, including vehicles weighing more than 14,000 pounds.
To be eligible for the Section 179 deduction, the asset must be used at least 50% for business in the first year it is placed in service. The cost eligible for the deduction is the business usage percentage.
Here are more details on qualifying and nonqualifying property, courtesy of the indispensable QuickFinder reference book.
Qualifying Property:
• Tangible personal property (such as machines, equipment,
furniture).
• Certain other tangible property used for specified purposes.
• Single-purpose agricultural or horticultural structures.
• Certain storage facilities.
• Railroad gradings or tunnel bores.
Some examples of qualifying property from the Depreciation QuickFinder Handbook:
• Airplanes.
• Automobiles.
• Billboards (if movable).
• Cattle—dairy or breeding.
• Citrus trees.
• Computers.
• Emus.
• Fruit trees.
• Gas storage tanks.
• Goats—breeding or milking.
• Greenhouses.
• Helicopters.
• Horses.
• Macadamia trees.
• Machinery and equipment.
• Mink and other fur-bearing animals.
• Office equipment—copiers, typewriters, fax machines, etc.
• Office furniture—desks, chairs, file cabinets, book shelves, etc.
• Off-the-shelf computer software.
• Oil and gas well and drilling equipment.
• Orchards.
• Ostriches.
• Printing presses.
• Refrigerators.
• Sheep—breeding.
• Signs.
• Sport Utility Vehicles (SUVs).
• Storage facility (e.g., peanut, hay, potato or tobacco).
• Store counters.
• Testing equipment.
• Tractors.
• Trailers (movable).
• Trucks.
• Vineyards.
• Water wells.
Nonqualifying Property:
• Property held for the production of income
(investment property, most rentals).
• Real property, including buildings and
their structural components, air
conditioning and heating units.
• Property acquired by gift, inheritance
or trade.
• Property purchased from certain related parties.
• Controlled group to controlled group transactions.
• Property used outside the United States.
• Property used in connection with furnishing lodging.
• Property used by tax-exempt organizations and governmental units.
• Property used by foreign persons or entities.
• Property held by an estate or trust.
• Property used by a passive activity.
• Intangible property (including computer software).
Some examples of non-qualifying property from the Depreciation QuickFinder Handbook:
• Air conditioning units.
• Barns.
• Billboards (if not movable).
• Bridges.
• Buildings.
• Docks.
• Elevators.
• Escalators.
• Fences.
• Foreign used property.
• Heating units.
• Investment property.
• Land.
• Landscaping.
• Leased property.
• Rental property.
• Roads.
• Shrubbery.
• Sidewalks.
• Stables.
• Swimming pools.
• Trailers (nonmobile with wheels detached and permanent utilities).
• Warehouses.
• Wharves.
If you prefer a more direct approach, you can also call our toll free hotline to reach a representative at 866-373-3468. We respect your privacy and will never sell or share your confidential information with any other parties.
Tax Advice | Finance | Code 179 | Investing | Equity
Tuesday, April 8, 2008
Everything you needed to know about tax code 179
Background: In the mid 1940s, Congress passed a law that would allow for tax deductions to farmers after World War II that would allow them to write off the cost of new equipment to encourage more people to work the land. Although many people took advantage of the law, it sat on the books for years without any changes to speak of. However, in 1996 the amount of money allowable to be written off started to grow for the sole purpose of encouraging business. Besides farm equipment, other things were added to the list such as vehicles.
To keep to the original spirit of the law, vehicles that have a gross vehicle weight of over 6000 pounds qualify for accelerated tax write-offs in the year they are bought up to a certain dollar amount. Until recently, that amount was $25000. In simple terms, if you qualify, you could write off up to $25000 of the amount of the vehicle in the same year you purchased it, plus the remainder of the price over the following four years.
MILEAGE LIMITATIONS: As with most vehicle related deductions, you are going to have to document your mileage to protect yourself in the case of an audit. Remember, your vehicle must be used a minimum of 50% of the time for business purposes to even qualify for the deduction, but the AMOUNT of business use will also dictate what amount you can write off this year. For instance, lets say you buy a $50,000 Lincoln Navigator and you use it 100% for your business, then you can write off $50,000 this year. But lets take that same Navigator, and say you only use it for business 60% of the time.... then your write off for the year is $30,000 ($50,000 times 60%=$30,000).
To read the rest of this extensive tax code 179 visit http://www.prestigeok.com, your one stop shop to buy new or used cars, sell your vehicle, get an online insurance quote, buy spare parts, accessories and even an Extended Warranty. Original article written by Jerry Reynolds, GM of Prestige Ford in Texas.
To keep to the original spirit of the law, vehicles that have a gross vehicle weight of over 6000 pounds qualify for accelerated tax write-offs in the year they are bought up to a certain dollar amount. Until recently, that amount was $25000. In simple terms, if you qualify, you could write off up to $25000 of the amount of the vehicle in the same year you purchased it, plus the remainder of the price over the following four years.
GREAT NEWS: In May of this year, thanks to the 2003 Tax Act, the amount was raised to $100,000. That means that you can buy one or more eligible vehicles and write-off the entire amount up to $100,000 on your 2003 tax return! This is all documented in Section 179 of the tax code. Prior to this, you could take advantage of writing off depreciation, but it had to be done over five years.
EXAMPLE: So say you spend $40,000 to buy a new truck or SUV thats used 100% in your self-employed business activity (meaning you conduct your operation as a sole proprietor, LLC member, or partner). Provided you make the vehicle purchase before year-end and start using it for business before then, you can probably deduct the entire
$40,000 cost on this years business tax forms.
SO WHATS THE CATCH? Only that your newly acquired vehicle will need to be used more than 50% of the time for business purposes. Heres a little more background so youll understand how the Section 179 break works. Ill walk you through steps to complete this process and hopefully reduce your tax liability for THIS YEAR.
STEP ONE is to find a vehicle that qualifies for the deduction. Again, it has to have a gross vehicle weight rating of over 6000 pounds. At the end of this article, I will give you a list of new vehicles that is current AND that for sure qualify based on the weight. You can also usually look on the drivers door of any car, and there will be a sticker with pertinent information on it. GVWR is what you are looking for.
Next, be SURE to PURCHASE the vehicle. Leases do not qualify. However if you DO lease there are certain deductions you can take, but generally you can only take them as you make payments. Interest rates are a non-issue, but rebates will affect the amount you can write off because factory rebates lower the sales transaction price.
MILEAGE LIMITATIONS: As with most vehicle related deductions, you are going to have to document your mileage to protect yourself in the case of an audit. Remember, your vehicle must be used a minimum of 50% of the time for business purposes to even qualify for the deduction, but the AMOUNT of business use will also dictate what amount you can write off this year. For instance, lets say you buy a $50,000 Lincoln Navigator and you use it 100% for your business, then you can write off $50,000 this year. But lets take that same Navigator, and say you only use it for business 60% of the time.... then your write off for the year is $30,000 ($50,000 times 60%=$30,000).
To read the rest of this extensive tax code 179 visit http://www.prestigeok.com, your one stop shop to buy new or used cars, sell your vehicle, get an online insurance quote, buy spare parts, accessories and even an Extended Warranty. Original article written by Jerry Reynolds, GM of Prestige Ford in Texas.
For Free Finance or Investing help call.
866-373-3468
866-373-3468
Friday, April 4, 2008
5 Tax Deductions Most Realtors Miss
Tax Planning Deserves Year-Around Consideration
The reason so many IRS deductions go unclaimed—Realtors and business owners don’t know about them. Or they don’t know about them early enough in the year to collect necessary information as they go along. As a person running your own operation, tax consequences need to influence how you conduct business, day in and day out. Where to spend—or not. How to structure transactions. When to act. How much you must pay in income taxes can easily determine whether your operation turns out to be profitable for the whole year. You’re entitled to claim every expense and write-off the law allows. That’s money in your pocket. As you read on, take a bow for those you’re already doing. And resolve to benefit from others that fit your situation (which now won’t pass you by). There’s still time to include these tax-saving deductions for your 2007 Federal tax return.Section 179 Property—Personal Property Write-off
Receive an up-front write-off of up to $125,000 for personal property purchased for use in the business. (This increases to $128,000 in 2008). That covers computers, printers, office furniture, fixtures, etc. It’s no longer necessary to depreciate the cost over the asset’s useful life, since you can expense the entire purchase price the year the asset is acquired. Notice that this deduction cannot be used for personal property like appliances and furniture in residential rental property, however. But it would apply for such equipment in commercial rentals. Travel Expenses
The Internal Revenue Code defines travel expenses as the “ordinary and necessary” expenses incurred while traveling away from home for your business, profession, or job. They include transportation, baggage, lodging, meals, laundry, telephone calls, and tips. Travel expenses do not include expenses for entertainment. Special Note: Regulations require that business travel expenses be substantiated by evidence like diaries, logs, receipts, paid bills, and expense reports. You must separately report each expense for transportation, lodging, and meals. Indicate the date you left and returned for each trip, and the number of days away spent on business. Note down your destination and the business reason for the trip, or what business benefit you expected to gain.Entertainment Expenses
The IRS restricts your ability to write off the cost of meals and entertainment. Unlike other expenses, only 50% of what you actually spend can be deducted as business expense. In my experience, Realtors too frequently under-claim entertainment expenses they’re entitled to take.
Avoid the risk of scrutiny by keeping certain information for each deduction:
* Date and time
* Place
* Amount claimed
* Relation to the person or event
* Anything else relevant
There are several areas where the 50% reduction does not apply. So break those figures out and write them off 100%.
* Transportation to and from an event
* Open houses for listings
* Events to reward employee performance
* Business gifts or incentives up to $25 per customer or client
Home Office DeductionYou may write off the portion of your home used regularly as the office of your business. Deduct a percentage of the utilities, repairs, maintenance, and depreciation. The tricky part—that area must be use exclusively for business purposes. And you cannot also have another off-site office where you conduct substantial work or administrative tasks of running your business. This topic is so important for Realtors (and widely misunderstood), that I’ll devote a future article to this. Put Family Members on the PayrollHire family members to work for the business. Pay them for the work done at the rate you’d pay someone else to do it. Minor children, your spouse, grandma, etc., can help with necessary tasks—answer the phone, cleaning and maintenance, record keeping, distributing flyers, performing computer tasks, etc. Keep detailed records of their tasks and hours. And the person does have to do the work. The numerous advantages of involving family members in the business go way beyond saving taxes. And since they really earned it, the “kiddie tax rules” do not apply.Get in the Habit of Finding Legitimate DeductionsTaxes won’t go away. But by claiming every deduction you’re entitled to, you can cut them down to size.
Section 179
Today TaxMama hears from IRA in California, who tells us . “This year I will have over $80,000 in Section 179 deductions for my sole proprietorship. Is this deduction a preference item for AMT purposes?”
Dear Ira,
You can only use the deduction if you have sufficient income, preferably in your business. Though, it will offset wages, too. http://www.irs.gov/publications/p946/ch02.html#d0e2599
If the $80,000 is substantially more than your business income, think very, very carefully before using it to offset other income on your tax return. You are apt to attract a hobby loss audit. So be prepared with a business plan showing when and how your business is going to turn a profit.
Now, to your actual question – is this a preference item for AMT (alternative minimum taxes), take a peek at Form 6251. http://www.irs.gov/pub/irs-pdf/f6251.pdf
See if you can find the line that says Section 179 depreciation on it. You can’t find it? Because it’s not there.
Two things are: Line 10 – Net operating loss deduction from Form 1040, line 21. Enter as a positive amount
If your Sec. 179 depreciation results in a net operating loss, that will affect AMT next year.
Line 17 – Depreciation on assets placed in service after 1986 (difference between regular tax and AMT)
But, that’s not AMT. It’s the difference between straight-line depreciation and MACRS depreciation – or any other accelerated depreciation.
Incidentally, did you know that California didn’t recognize the old Sec 179 limits. So, this new, higher limit is certainly not included in California’s Franchise Tax Code. For California, your limit is $25,000. http://www.ftb.ca.gov/forms/07_forms/07_540dins.pdf
You will have to use regular depreciation on the rest of the cost. So you will have a large difference between IRS and California depreciation for many years to come.
Definitely more than you ever wanted to know!
Dear Ira,
You can only use the deduction if you have sufficient income, preferably in your business. Though, it will offset wages, too. http://www.irs.gov/publications/p946/ch02.html#d0e2599
If the $80,000 is substantially more than your business income, think very, very carefully before using it to offset other income on your tax return. You are apt to attract a hobby loss audit. So be prepared with a business plan showing when and how your business is going to turn a profit.
Now, to your actual question – is this a preference item for AMT (alternative minimum taxes), take a peek at Form 6251. http://www.irs.gov/pub/irs-pdf/f6251.pdf
See if you can find the line that says Section 179 depreciation on it. You can’t find it? Because it’s not there.
Two things are: Line 10 – Net operating loss deduction from Form 1040, line 21. Enter as a positive amount
If your Sec. 179 depreciation results in a net operating loss, that will affect AMT next year.
Line 17 – Depreciation on assets placed in service after 1986 (difference between regular tax and AMT)
But, that’s not AMT. It’s the difference between straight-line depreciation and MACRS depreciation – or any other accelerated depreciation.
Incidentally, did you know that California didn’t recognize the old Sec 179 limits. So, this new, higher limit is certainly not included in California’s Franchise Tax Code. For California, your limit is $25,000. http://www.ftb.ca.gov/forms/07_forms/07_540dins.pdf
You will have to use regular depreciation on the rest of the cost. So you will have a large difference between IRS and California depreciation for many years to come.
Definitely more than you ever wanted to know!
Wednesday, April 2, 2008
Congress is stingy on useful home tax breaks
There's always a little pain involved in wading through the U.S. tax code.
Yet you can ease the dull ache of dealing with Internal Revenue Service forms and language when you find provisions that will lower your bill.
There are plenty of plums and pits in this year's ever-changing version of tax write-offs. Some deductions are designed to pump up the flagging U.S. economy, while others are meant to discourage taxpayers from being dishonest.
None of the new tax provisions will make much of a difference to those facing the heaviest financial burdens. Congress could have been more generous to homeowners facing the loss of their properties when their adjustable-rate loans or other housing costs became unaffordable.
Instead, lawmakers threw a moldy crust of bread in the form of rebates. These checks won't forestall a recession or relieve the ever-worsening credit crisis.
The way the new economic stimulus law is written, the rebates are "advance payments" that are credits against your 2008 tax. That means, in the interpretation of Commerce Clearing House, a Riverwoods, Ill.-based tax-information publisher, "a taxpayer filing a 2007 return in 2008 cannot claim the rebate as an offset to his or her 2007 tax liability." The government check can't be applied to estimated taxes for 2008, either. Although the rebates range from $300 for an individual to $2,400 for a married couple with four children, there are income limits on who can receive them.
Rebate phaseout
Like many other tax deductions, the rebate is unavailable if you exceed a certain income level.
For married couples, a $1,200 giveback isn't paid to joint filers who make more than $174,000 in adjusted income. Singles get cut off from a $600 credit at $87,000.
Another example of Congress coming up short on a new break that could have benefited more taxpayers is the write-off on mortgage insurance premiums.
Under a new rule, you can deduct mortgage insurance premiums paid in 2007. So far so good, until you get to the income cut-offs.
If your adjusted gross income is more than $100,000 — $50,000 if your filing status is married filing separately — the amount of your mortgage insurance premiums that are otherwise deductible is reduced and may be eliminated, the IRS says.
Debt write-off
Only if you are in dire circumstances with your home will Congress cut you some slack. You don't have to pay tax on as much as $2 million in forgiven mortgage debt.
Previously, the law cruelly made you pay tax on what you owed — as if it were income. In order to reap this break, though, you would probably lose your home through foreclosure or the sale price would be less than the mortgage value.
There's more tough love when it comes to charity.
The IRS now needs proof of any cash contribution to charities, regardless of the amount. That means a canceled check, bank or credit-card statement. A letter from the charity also works.
"That $5 you dropped into the Salvation Army bucket — you can't take a deduction without a receipt," says Barry Kaplan, a fee-only financial planner with Cambridge Southern Financial Advisors in Atlanta and a native of Lakewood. "You'll need a receipt or canceled check for all charitable gifts."
Some plums
If you give more, you need to document more. Donations valued at more than $5,000 must be backed up by a qualified appraisal unless they are publicly traded securities.
While the IRS cracks down in some areas in an effort to stem tax cheating, lawmakers are still interested in boosting the U.S. economy.
Buy any new property for your business? You can completely write off or "expense" as much as $250,000 of the value of what you bought this year. The old limit was $128,000.
You don't have to be a corporation to qualify for this break. Home businesses also can reap this Section 179 provision. Computers, furniture and other office items qualify. The property must be used "more than 50 percent for business and must be newly purchased property."
Keep in mind that this write-off doesn't apply to real estate, which has mind-numbing rules of its own. Another caveat: For all other qualifying property, the increased limit only applies this year.
The agency will also provide some help if you are a whistleblower who exposes a tax cheat. If you get an award from the IRS, you may be able to "deduct attorney fees and court costs paid by you."
It's comforting to know that the tax code will bestow some relief upon citizens who try to enforce it. Now if Congress could transform tax preparation into a fair and simple task, that would be preferable.
For more information on how you can take advantage of the Code 179 tax laws complete the information below.
For Free information on more tax saving ideas click here.
Yet you can ease the dull ache of dealing with Internal Revenue Service forms and language when you find provisions that will lower your bill.
There are plenty of plums and pits in this year's ever-changing version of tax write-offs. Some deductions are designed to pump up the flagging U.S. economy, while others are meant to discourage taxpayers from being dishonest.
None of the new tax provisions will make much of a difference to those facing the heaviest financial burdens. Congress could have been more generous to homeowners facing the loss of their properties when their adjustable-rate loans or other housing costs became unaffordable.
Instead, lawmakers threw a moldy crust of bread in the form of rebates. These checks won't forestall a recession or relieve the ever-worsening credit crisis.
The way the new economic stimulus law is written, the rebates are "advance payments" that are credits against your 2008 tax. That means, in the interpretation of Commerce Clearing House, a Riverwoods, Ill.-based tax-information publisher, "a taxpayer filing a 2007 return in 2008 cannot claim the rebate as an offset to his or her 2007 tax liability." The government check can't be applied to estimated taxes for 2008, either. Although the rebates range from $300 for an individual to $2,400 for a married couple with four children, there are income limits on who can receive them.
Rebate phaseout
Like many other tax deductions, the rebate is unavailable if you exceed a certain income level.
For married couples, a $1,200 giveback isn't paid to joint filers who make more than $174,000 in adjusted income. Singles get cut off from a $600 credit at $87,000.
Another example of Congress coming up short on a new break that could have benefited more taxpayers is the write-off on mortgage insurance premiums.
Under a new rule, you can deduct mortgage insurance premiums paid in 2007. So far so good, until you get to the income cut-offs.
If your adjusted gross income is more than $100,000 — $50,000 if your filing status is married filing separately — the amount of your mortgage insurance premiums that are otherwise deductible is reduced and may be eliminated, the IRS says.
Debt write-off
Only if you are in dire circumstances with your home will Congress cut you some slack. You don't have to pay tax on as much as $2 million in forgiven mortgage debt.
Previously, the law cruelly made you pay tax on what you owed — as if it were income. In order to reap this break, though, you would probably lose your home through foreclosure or the sale price would be less than the mortgage value.
There's more tough love when it comes to charity.
The IRS now needs proof of any cash contribution to charities, regardless of the amount. That means a canceled check, bank or credit-card statement. A letter from the charity also works.
"That $5 you dropped into the Salvation Army bucket — you can't take a deduction without a receipt," says Barry Kaplan, a fee-only financial planner with Cambridge Southern Financial Advisors in Atlanta and a native of Lakewood. "You'll need a receipt or canceled check for all charitable gifts."
Some plums
If you give more, you need to document more. Donations valued at more than $5,000 must be backed up by a qualified appraisal unless they are publicly traded securities.
While the IRS cracks down in some areas in an effort to stem tax cheating, lawmakers are still interested in boosting the U.S. economy.
Buy any new property for your business? You can completely write off or "expense" as much as $250,000 of the value of what you bought this year. The old limit was $128,000.
You don't have to be a corporation to qualify for this break. Home businesses also can reap this Section 179 provision. Computers, furniture and other office items qualify. The property must be used "more than 50 percent for business and must be newly purchased property."
Keep in mind that this write-off doesn't apply to real estate, which has mind-numbing rules of its own. Another caveat: For all other qualifying property, the increased limit only applies this year.
The agency will also provide some help if you are a whistleblower who exposes a tax cheat. If you get an award from the IRS, you may be able to "deduct attorney fees and court costs paid by you."
It's comforting to know that the tax code will bestow some relief upon citizens who try to enforce it. Now if Congress could transform tax preparation into a fair and simple task, that would be preferable.
For more information on how you can take advantage of the Code 179 tax laws complete the information below.
For Free information on more tax saving ideas click here.
A dozen deductions for your business
A dozen deductions for your business
By DANA DRATCH
Bankrate.com
Small-business tax rule No. 1: Don’t mess with the Internal Revenue Service.
But that doesn’t mean you should cheat yourself. Take every legal deduction you can. Here are a dozen that even savvy small-business owners and entrepreneurs sometimes forget.
1. Home office
Concerned that claiming a home office deduction is tantamount to sending an engraved invitation to an IRS auditor? Don’t be, says Jan Zobel, author of Minding Her Own Business: The Self-Employed Woman’s Guide to Taxes and Recordkeeping.
“I don’t agree that chances of getting audited are greater with a home office deduction,” said Zobel, a San Francisco Bay area tax expert who specializes in serving the self-employed. The key is that you use the term “home office” the same way the IRS does. The tax agency says it must be a space devoted to your business and absolutely nothing else. Deducting the den that houses the family computer and serves as a guest bedroom won’t fly with Uncle Sam.
“If you only have one computer and you have a child over 4, the IRS is going to be pretty certain that the child is using the computer,” said Zobel. “And the burden of proof is on you.”
The deduction, however, isn’t limited to a full room. Your home office can be part of a room. Just how much of the space is deductible? Measure your work area and divide by the square footage of your home. That percentage is the fraction of your home-related business expenses — rent, mortgage, insurance, electricity, etc.— that you can claim.
2. Office supplies
Even if you don’t take the home office deduction, you can deduct the business supplies you buy. Hang on to those receipts, because these expenditures will offset your taxable business income.
3. Furniture
When your office supplies are more than just pens and paper, you have another tax-cutting opportunity.
Office furniture acquisitions provide a couple of choices. Deduct 100 percent of the cost in the year of the purchase or deduct a portion of the expense over seven years, also known as depreciation.
To take the whole cost in one tax year, you’ll use the Section 179 deduction (named for the part of the tax code where the law appears). Recent tax law changes have made this deduction even more attractive. For the 2007 tax year, a business owner can expense up to $125,000. The news is even better for the 2008 tax year. The economic stimulus bill enacted in February increased the Section 179 amount for this tax year to $250,000.
If you choose instead to depreciate the desks and filing cabinets, you can’t simply split the cost into equal portions over the depreciation period. Instead, you must use an IRS chart to make separate calculations each year.
Which is better for you? Anticipate the times that your business will need these deductions the most. Both options are reported on IRS Form 4562.
4. Other equipment
Items such as computers, copiers, fax machines and scanners also are tax deductible. As with furniture, you can take 100 percent up front or depreciate (this time over five years).
5. Software and subscriptions
The recently increased Section 179 provides another tax break in this area of business expenses. Previously, a company had to depreciate the cost of computer software over three years. Now, off-the-shelf software a business buys can be fully expensed in the year purchased.
The rules for deducting business and industry-related magazine subscriptions weren’t changed. You can continue to take the total costs as a full deduction in the year spent.
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6. Mileage
If you drive for business, the IRS wants to give you some of your money back. But Uncle Sam loves documentation, so keep a notebook in your vehicle to record the date, mileage, tolls, parking costs and the purpose of your trip.
At the end of the year, you have two choices. You can total the mileage and add in the tolls and parking to calculate your deduction. Once you have your mileage total, multiply it by 48.5 cents for your 2007 deduction. For 2008 business tax purposes, the rate goes to 50.5 cents a mile.
Or you can measure your business usage against your personal driving and deduct that portion of your auto-related expenses, said Zobel. Remember to include gas, repairs and insurance.
If you are leasing, include those payments. If you are buying the car, factor in the interest on your loan and depreciation on your vehicle.
And if your company’s office is at your house, you get a bit more of a break. You can deduct the entire business-related mileage, from the minute you pull out of the driveway until you return home, said Gary W. Carter, author of J.K. Lasser’s Taxes Made Easy for Your Home-Based Business: The Ultimate Tax Handbook for the Self-Employed.
If your business is not home-based, your mileage meter starts at your first business-related destination and ends at your last. You can’t include the drive to and from home, said Carter, a CPA and professor at the University of Minnesota. In this case, try to schedule several business appointments on the same day to allow you to take the mileage between stops as a tax write-off.
7. Travel, meals, entertainment and gifts
Good news, small-business travelers. You might as well stay in a nice hotel, because the entire cost is tax deductible. Likewise, the cost of travel — air, rail or auto — is 100 percent deductible, as are costs associated with life on the road (dry cleaning, rental cars and tipping the bellboy).
The only exception is eating out. You can deduct only 50 percent of your meals while traveling. So stay at the Ritz and eat at Wendy’s.
Once you get home, your on-the-job meals aren’t deductible — unless you bring along a client to talk business. In this case, you might consider splurging on a fancier meal because then you can write off half such work-related dining costs.
The 50 percent deduction limit applies to most other client entertainment expenses, too. But a direct gift to a client or employee is 100 percent deductible, said Zobel, up to $25 per person per year.
8. Insurance premiums
Self-employed and paying your own health insurance premiums? These costs are 100 percent deductible.
This break primarily benefits proprietorships, but there are limits. The deduction can’t be more than your business’s net profit. And it’s not allowed if you were eligible for other health care coverage, including that offered by your employed spouse’s medical plan.
Did your spouse work for you last year? Then, Carter said, you can get the full medical premiums deduction on your return. As an employee, your spouse’s premiums are 100 percent deductible; if you and the children were on her policy as dependents, so are those costs.
Two caveats:
1. Your spouse’s employment must be real, not in name only, and you must offer coverage equally to any other employees.
2. Failure to meet these requirements could result in a lawsuit, an audit or both.
You also can include some of the premiums you pay for long term care insurance for yourself, your spouse or dependents.
9. Retirement contributions
Are you self-employed and saving for your own retirement with a SEP-IRA or Keogh? Don’t forget to deduct your contribution on your personal income tax return.
10. Social Security
The bad news: If you’re self-employed or starting a small business, you have to pay double the Social Security contributions you would as an employee. That’s because federal law requires that the employer pay half and the employee pay half. Self-employed workers are both, meaning the total will equal 15.3 percent of your net profits.
The good news: You can deduct half of the contribution on your 1040.
11. Telephone charges
You can deduct the cost of the business calls that you make for business from home. When your bill comes in, circle the business-related calls, total them up and keep a copy. At the end of the year, tally your 12 bills and deduct 100 percent.
The IRS assumes that you will have a phone in your house anyway, so Zobel cautions that regular fees and charges don’t count toward your deduction. But if you have a second line installed and use it only for business, all of these charges are deductible.
12. Child labor
“It’s always good to employ your kids,” said Carter.
Depending upon how much you paid them, they might be able to avoid income taxes. Plus, there is no Social Security tax when you hire your child who is 17 or younger and you can deduct the salary as a business expense.
This break is available, however, only if you operate as a sole proprietor or as a partnership in which you and your spouse are the only partners. If your business runs as a corporation, then it, not you, are considered the employer and the corporation is not relieved of the tax liabilities.
Make the money go even further. Have your child contribute to a Roth IRA, said Carter. Not only have you gotten a nice tax deduction from the salary and trained your youngster to save, you’ve also help establish a nest egg for his or her future.
By DANA DRATCH
Bankrate.com
Small-business tax rule No. 1: Don’t mess with the Internal Revenue Service.
But that doesn’t mean you should cheat yourself. Take every legal deduction you can. Here are a dozen that even savvy small-business owners and entrepreneurs sometimes forget.
1. Home office
Concerned that claiming a home office deduction is tantamount to sending an engraved invitation to an IRS auditor? Don’t be, says Jan Zobel, author of Minding Her Own Business: The Self-Employed Woman’s Guide to Taxes and Recordkeeping.
“I don’t agree that chances of getting audited are greater with a home office deduction,” said Zobel, a San Francisco Bay area tax expert who specializes in serving the self-employed. The key is that you use the term “home office” the same way the IRS does. The tax agency says it must be a space devoted to your business and absolutely nothing else. Deducting the den that houses the family computer and serves as a guest bedroom won’t fly with Uncle Sam.
“If you only have one computer and you have a child over 4, the IRS is going to be pretty certain that the child is using the computer,” said Zobel. “And the burden of proof is on you.”
The deduction, however, isn’t limited to a full room. Your home office can be part of a room. Just how much of the space is deductible? Measure your work area and divide by the square footage of your home. That percentage is the fraction of your home-related business expenses — rent, mortgage, insurance, electricity, etc.— that you can claim.
2. Office supplies
Even if you don’t take the home office deduction, you can deduct the business supplies you buy. Hang on to those receipts, because these expenditures will offset your taxable business income.
3. Furniture
When your office supplies are more than just pens and paper, you have another tax-cutting opportunity.
Office furniture acquisitions provide a couple of choices. Deduct 100 percent of the cost in the year of the purchase or deduct a portion of the expense over seven years, also known as depreciation.
To take the whole cost in one tax year, you’ll use the Section 179 deduction (named for the part of the tax code where the law appears). Recent tax law changes have made this deduction even more attractive. For the 2007 tax year, a business owner can expense up to $125,000. The news is even better for the 2008 tax year. The economic stimulus bill enacted in February increased the Section 179 amount for this tax year to $250,000.
If you choose instead to depreciate the desks and filing cabinets, you can’t simply split the cost into equal portions over the depreciation period. Instead, you must use an IRS chart to make separate calculations each year.
Which is better for you? Anticipate the times that your business will need these deductions the most. Both options are reported on IRS Form 4562.
4. Other equipment
Items such as computers, copiers, fax machines and scanners also are tax deductible. As with furniture, you can take 100 percent up front or depreciate (this time over five years).
5. Software and subscriptions
The recently increased Section 179 provides another tax break in this area of business expenses. Previously, a company had to depreciate the cost of computer software over three years. Now, off-the-shelf software a business buys can be fully expensed in the year purchased.
The rules for deducting business and industry-related magazine subscriptions weren’t changed. You can continue to take the total costs as a full deduction in the year spent.
Search KansasCity.com Archives Historic Archives Web Search powered by YAHOO! SEARCH
Welcome Guest
Login | Register | Sign in to Classifieds Logout | Member Center | Sign in to Classifieds
Subscribe Today!
Digital E-Star
* Top Jobs
o • Career Extravaganza
* Cars
* Real Estate
* Rentals
* Local Shopping
o • KC Auto Deals
o • ShopLocal
o • Newspaper Ads
* All Classifieds
o • Create an Ad
o • Find an Ad
o • Pets
*
* News
* Columnists
* Sports
* Entertainment
* Video | Photos
* Business
o Announcements
o Columnists
o Companies
o Consumer News
o Emerging Business
o MoneyWise
o People & Events
o Star 50
o Technology
o Workplace
* FYI/Living
* Star Magazine
* Opinion
* Extras
* Press Release Central
* Past Articles
* The Star's Front Page
* Local Traffic
* Maps & Directions
* Yellow Pages
* Local Coupons
* Discussion Boards
* Visitor's Guide
* Weddings
* Hemingway
* The Star in Education
* Services
* RSS
* Place an Ad
* Contact Us
* Advertise
* About The Star
* Code of Ethics
* Star Speakers Bureau
* Star Awards
* Star Tours
* The Kansas City Store
6. Mileage
If you drive for business, the IRS wants to give you some of your money back. But Uncle Sam loves documentation, so keep a notebook in your vehicle to record the date, mileage, tolls, parking costs and the purpose of your trip.
At the end of the year, you have two choices. You can total the mileage and add in the tolls and parking to calculate your deduction. Once you have your mileage total, multiply it by 48.5 cents for your 2007 deduction. For 2008 business tax purposes, the rate goes to 50.5 cents a mile.
Or you can measure your business usage against your personal driving and deduct that portion of your auto-related expenses, said Zobel. Remember to include gas, repairs and insurance.
If you are leasing, include those payments. If you are buying the car, factor in the interest on your loan and depreciation on your vehicle.
And if your company’s office is at your house, you get a bit more of a break. You can deduct the entire business-related mileage, from the minute you pull out of the driveway until you return home, said Gary W. Carter, author of J.K. Lasser’s Taxes Made Easy for Your Home-Based Business: The Ultimate Tax Handbook for the Self-Employed.
If your business is not home-based, your mileage meter starts at your first business-related destination and ends at your last. You can’t include the drive to and from home, said Carter, a CPA and professor at the University of Minnesota. In this case, try to schedule several business appointments on the same day to allow you to take the mileage between stops as a tax write-off.
7. Travel, meals, entertainment and gifts
Good news, small-business travelers. You might as well stay in a nice hotel, because the entire cost is tax deductible. Likewise, the cost of travel — air, rail or auto — is 100 percent deductible, as are costs associated with life on the road (dry cleaning, rental cars and tipping the bellboy).
The only exception is eating out. You can deduct only 50 percent of your meals while traveling. So stay at the Ritz and eat at Wendy’s.
Once you get home, your on-the-job meals aren’t deductible — unless you bring along a client to talk business. In this case, you might consider splurging on a fancier meal because then you can write off half such work-related dining costs.
The 50 percent deduction limit applies to most other client entertainment expenses, too. But a direct gift to a client or employee is 100 percent deductible, said Zobel, up to $25 per person per year.
8. Insurance premiums
Self-employed and paying your own health insurance premiums? These costs are 100 percent deductible.
This break primarily benefits proprietorships, but there are limits. The deduction can’t be more than your business’s net profit. And it’s not allowed if you were eligible for other health care coverage, including that offered by your employed spouse’s medical plan.
Did your spouse work for you last year? Then, Carter said, you can get the full medical premiums deduction on your return. As an employee, your spouse’s premiums are 100 percent deductible; if you and the children were on her policy as dependents, so are those costs.
Two caveats:
1. Your spouse’s employment must be real, not in name only, and you must offer coverage equally to any other employees.
2. Failure to meet these requirements could result in a lawsuit, an audit or both.
You also can include some of the premiums you pay for long term care insurance for yourself, your spouse or dependents.
9. Retirement contributions
Are you self-employed and saving for your own retirement with a SEP-IRA or Keogh? Don’t forget to deduct your contribution on your personal income tax return.
10. Social Security
The bad news: If you’re self-employed or starting a small business, you have to pay double the Social Security contributions you would as an employee. That’s because federal law requires that the employer pay half and the employee pay half. Self-employed workers are both, meaning the total will equal 15.3 percent of your net profits.
The good news: You can deduct half of the contribution on your 1040.
11. Telephone charges
You can deduct the cost of the business calls that you make for business from home. When your bill comes in, circle the business-related calls, total them up and keep a copy. At the end of the year, tally your 12 bills and deduct 100 percent.
The IRS assumes that you will have a phone in your house anyway, so Zobel cautions that regular fees and charges don’t count toward your deduction. But if you have a second line installed and use it only for business, all of these charges are deductible.
12. Child labor
“It’s always good to employ your kids,” said Carter.
Depending upon how much you paid them, they might be able to avoid income taxes. Plus, there is no Social Security tax when you hire your child who is 17 or younger and you can deduct the salary as a business expense.
This break is available, however, only if you operate as a sole proprietor or as a partnership in which you and your spouse are the only partners. If your business runs as a corporation, then it, not you, are considered the employer and the corporation is not relieved of the tax liabilities.
Make the money go even further. Have your child contribute to a Roth IRA, said Carter. Not only have you gotten a nice tax deduction from the salary and trained your youngster to save, you’ve also help establish a nest egg for his or her future.
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