  PO Box 2214 Oregon City OR 97045 503-656-0699 |
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Date last modified:
01/11/10 |
July 2008 Mileage Rate Changes In response to higher fuel costs, the IRS increased mileage rates beginning July 1, 2008. This means if you are claiming mileage deductions for business use of a personal car or medical mileage, you must differentiate between miles driven January-June and July-December – we’ll be asking! And the IRS might ask to see your records because this can be a significant expense. The old and new mileage rates, in cents per mile, are:
The rate for driving your personal vehicle for charitable organization remains at 14 cents per mile because the IRS does not set this rate.
Federal Tax Stimulus Rebates The US Treasury continues to send out the stimulus rebates based on taxpayers’ 2007 income. You can check the status of your rebate at the IRS website. Go to Where’s My Refund? Then choose the Where’s My Stimulus Payment? links on both the first page and second page. You will need to fill in the first taxpayer’s Social Security number, your filing status and the total number of exemptions claimed on your 2007 return. Remember the government can use your rebate to pay back taxes or other government debts.
Debt Relief May Be Income Given the current economic climate, it is important to remind our clients that cancellation of debt may be treated as taxable income by the IRS. Debt forgiveness, in essence, creates “income” and is reported to the taxpayer on a form 1099-C. Cancelled debt may not be taxable when it is debt discharged in bankruptcy, if the taxpayer is insolvent at the time of cancellation or if the loan is non-recourse. The burden of proof is on the taxpayer, so saving pertinent documents, correspondence and records is essential.
Home foreclosures are treated a bit differently. Congress passed The Mortgage Forgiveness Debt Relief Act of 2007 that applies to mortgage debts forgiven in 2007, 2008 and 2009. Up to two million dollars of forgiven acquisition debt on the taxpayer’s principal residence is eligible for exclusion from income under this act. Debt cancelled through mortgage restructuring as well as mortgage debt forgiven in connection with foreclosure may qualify for this relief.
Taxpayers will receive a 1099-C reporting the amount of mortgage debt cancelled and the fair market value of the property. In some cases, taxpayers will have to calculate both income from debt cancellation and gain from foreclosure. To figure gain or loss, the taxpayer will need to calculate their adjusted basis in the home. A loss on the sale or foreclosure of a personal residence is not deductible.
New Extension Deadline Beginning in 2009, Partnerships, Estates and Trusts that file for an extension will have to file by September 15 instead of October 15.
Zero Percent Capital Gains Rate Some taxpayers in the 10% and 15% tax brackets will be eligible for a long-term capital gain rate of 0%! The rate applies to stocks and mutual funds sold during tax years 2008-2010 that were held for more than a year. Selling an investment can add enough income to raise a taxpayer into a higher tax bracket so it is important to plan carefully. Sales of collectibles and depreciable real property do not qualify for this capital gain treatment. Retirement account distributions are taxed as ordinary income.
Charitable Donations Ask for and save all receipts for cash and non-cash donations made during the year. Non-cash donations, such as clothing and household goods, must be itemized and a value assigned to each item by the donor. The IRS may ask for documentation to back-up the deduction claimed on your taxes.
Do You Have a New Mailing Address? When you change your mailing address, it is important to notify employers you worked for during the year. If the income was reported to the IRS, even if you did not receive the W-2 or 1099, you still must include the income on your tax return. The same applies to other tax documents reporting Unemployment, Bank Interest and all Investment Account income, etc. Delays are expensive because interest accumulates if additional tax is owed on unreported income. Remember to send our office your new address, too, so we can keep in touch!
Energy Tax Credits Buying new energy efficient appliances or a new hybrid vehicle? There are state tax credits waiting but you must apply for them – your salesperson is NOT doing this for you. Go to our website for more information and necessary links – mrbilltaxman.com/newstouse.
Calendar Notes September 15 Taxes due for S-Corps on Extension September 15 Third Quarter Tax Estimates due October 15 Taxes due for Individuals on Extension October 31 Third Quarter Payroll Taxes are Due
Our Accountants to the Rescue! Use our Accounting and Bookkeeping services to help keep your business on track. We untangle your paperwork nightmares, organize records and provide you with valuable reports. Contact us now to be on top of the game next filing season!
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