For more information on these subjects please read William Perez’s article
or contact our office for answers to your questions.
Year-End Tax Tips: Gifts to Family & Friends
Congress Passes Worker, Retiree and Employer Recovery Act
Late on Dec. 11, the Senate approved H.R. 7327, the “Worker, Retiree and Employer Recovery Act” (the Pension Act) by unanimous consent. The bill was passed by the House on Dec. 10 by unanimous consent, so the measure is cleared for the President’s signature.
The Pension Act suspends the need to take required minimum distributions from qualified defined contribution plans and IRAs for calendar year 2009 only, and provides much needed funding relief for pension plans that have seen assets fall precipitously due to the stock market decline. Additionally, the Pension Act makes many technical corrections to the Pension Protection Act of 2008 (PPA), including changes that will require qualified plans to offer nonspouse beneficiaries the option to transfer a decedent’s plan interest to an IRA set up to receive the transfer on behalf of the beneficiary. This change for nonspouse beneficiaries will apply for plan years beginning after 2009.
© 2008 ThomsonReuters/RIA. All rights reserved.
Did you know that charities have recently experienced a significant decline in donations due to the current economic crisis? Since so many people have lost their jobs, taken pay cuts or suffered losses in the stock market, they are less likely to give money to charitable organizations. However, writing a check to a local charity is not the only way to help others in need. Consider donating old clothes, toys or electronics that are no longer useful to your family. Not only will you be helping a worthy cause, but you will be able to estimate your deductions to determine if you are eligible to itemize instead of taking a standard deduction.
Although charitable donations are a great way to receive a tax deduction it is important to remember these things:
Check out this link to determine the value of your donations for 2008:
http://www.salvationarmysouth.org/valueguide.htm
Please visit this website for more information on charitable donations, deductions and limitations for 2008:
http://taxes.about.com/b/2008/12/01/giving-to-charity-year-end-tax-tips.htm
Business standard mileage rate for 2009 decreases; other rates also decrease:
IRS has announced that the optional mileage allowance for owned or leased autos (including vans, pickups or panel trucks) is 55¢ per mile for business travel after 2008. That’s 3.5¢ down from the 58.5¢ allowance for business mileage in the last six months of 2008. Further, the rate for using a car to get medical care or in connection with a move that qualifies for the moving expense deduction is 24¢ per mile, down 3¢ from the 27¢ per mile allowance for the last half of 2008. Rev Proc 2008-72, 2008-50 IRB , IR 2008-131
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RIA Daily Updates – 11/25/2008 |
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Visit the Home tab in Checkpoint for new content and features
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2008 Changes in Section 179 Deductions for Vehicles
The Economic Stimulus Act of 2008 may benefit your small business with the following changes in the Section 179 Deductions for new vehicles:
EXAMPLE 1
In 2008, Frank buys a new $60,000 Escalade and uses it 100% in his business. On his 2008 Form 4562, Frank can claim a $25,000 Section 179 deduction. Next, he can deduct $17,500 worth of bonus depreciation [($60,000 - $25,000) x .50)] for a total deduction of $42,500.
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Deduction Limits for Vehicles |
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2007 |
2008 |
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| 280F Depr. | Max Section | 280F Depr. | Max Section | |
| Description | Limit | 179 Ded. | Limit | 179 Ded. |
| Car – GVW (unloaded) | $3,060.00 | $3,060.00 | $2,960.00 | $10,960.00* |
| up to 6000 lbs. | ||||
| Truck or Van (including SUV’s | $3,260.00 | $3,260.00 | $3,160.00 | $11,160.00* |
| & minivans on truck | ||||
| chassis)- GVW (loaded) | ||||
| GVW (loaded) up to 6000 lbs | ||||
| Car, truck or van (including | N/A | $25,000.00 | N/A | $25,000.00** |
| SUV’s & minivans), GVW over | ||||
| 6000 lbs. but not over 14000 lbs. | ||||
| Vehicles-GVW over 6000 | ||||
| but not over 14,000 lbs that: | ||||
| -Are designed to seat more | ||||
| than nine passengers behind | ||||
| the driver seat (for | ||||
| example, a hotel shuttle van) | ||||
| -Have an open cargo area | ||||
| or covered box that is at least | ||||
| six feet long and not readily | N/A | $125,000.00 | N/A | $250,000.00 |
| accessible from the | ||||
| passenger compartment | ||||
| (for example, a pick-up with | ||||
| full-size cargo bed) or | ||||
| -Have an enclosure fully | ||||
| enclosing the driver | ||||
| compartment and load | ||||
| carrying device, do not have | ||||
| seating behind the driver’s | ||||
| seat and have no body section | ||||
| protruding more than 30 | ||||
| inches ahead of the windshield | ||||
| (for example a delivery van). | ||||
| Truck or van, GVW | ||||
| (loaded) over 14,000lbs. | N/A | $125,000.00 | N/A | $250,000.00 |
| *For new assets placed in service during the 2008 calendar year that are used at least | ||||
| 50% for the business. (These numbers are based on 100% business use.) | ||||
| **May be combined with bonus depreciation if the SUV is new, used for at least 50% | ||||
| business, and has a gross vehicle weight (GVW) rating of over 6,000 pounds. | ||||
How Will “The Change” Affect You?
The election is finally over and Barack Obama will be the new President of the United States. What does this mean for you? Over the last several months you have probably heard of Obama’s plans to change America in a positive way, but do you know how he intends to do this?
To learn about Obama’s positions on key issues such as taxes, health care and the current economic crisis please click on the following link: http://money.cnn.com/galleries/2008/news/0810/gallery.obama_issues/index.html
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See attached Blog in regard to this issue. Call us if you have a question.
Banking Fees Can Cost You a Bundle
Did you know that banking fees are currently at a record high? A recent study by Bankrate.com revealed that fees for everything from bounced checks to ATM use have increased in the past year. Although bank service charges may seem insignificant at the time, you may be surprised that these fees can cost you a bundle each year. However, most of these service charges can be avoided if customers are conscious of their banking habits.
The chart below describes some of the most common fees incurred by banking customers, the recent increase in fees, and tips on how to avoid these bank charges altogether.
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Description |
2007 – 2008 |
How can you avoid these fees? |
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Insufficient Funds Fees |
Increased 2.5% to an average of $28.95 per bounced check |
Balance your checkbook on a regular basis or enroll in an overdraft protection program |
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ATM Fees and Surcharges |
Increased 11% to an average of $1.98 for every transaction not made at your bank’s ATM |
Estimate your cash needs in advance and make time to use your bank for withdrawals |
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Interest Bearing Checking Accounts (minimum balance requirements)
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Increased 4 % to an average minimum account balance of $3461.84 (while the interest earned on these accounts fell from 0.32% to 0.24%) |
If it is difficult to maintain the high minimum balance, switch to a non-interest bearing account (the fees you’re charged for not maintaining the balance may exceed the interest you earn anyway) |
For more information please visit:
http://www.bankrate.com/brm/news/chk/chkstudy/20081027-checking-study-a1.asp?caret=1
Even though you may not currently receive Social Security benefits, you probably know someone who does. On October 16, 2008 the Social Security Administration (SSA) announced the largest cost-of-living adjustment (COLA) since 1982. This adjustment will generally increase monthly Social Security Income (SSI) by 5.8 percent beginning in January of 2009. Other changes include an increase in disability thresholds and higher earnings thresholds for working beneficiaries under the age of 70.
Although COLAs are made annually, this year’s above-average increases were prompted by the rising costs-of-living expenses such as food and energy. Food costs increased 6.3 percent within the past year, while energy costs increased 12 percent. These expenses absorb a large portion of most beneficiaries’ fixed incomes, so this increase in monthly cash flow will undoubtedly be welcomed by many.
For more details on this subject and information on the new provisions please visit the following websites:
CCH
http://www.cch.com/press/news/2008/20081016h.asp
Social Security Online
http://www.ssa.gov/OACT/COLA/colasummary.html
