Tax Guru – Ker$tetter Letter

Helping real people win the tax game.

Archive for July, 2008

The new tax law changes

Posted by taxguru on July 31, 2008

As always, our rulers in DC have screwed up any attempt at tax simplification with yet another new law changing the rules of the game.

Here are some highlights of the new tax related changes courtesy of  one of my favorite reference sources,  TaxCoach Software:

On Wednesday, July 30, President Bush signed the “Housing and Economic Recovery Act of 2008.” While the bill focuses on protecting lenders and preventing foreclosures, there are three other tax provisions worth noting.

1.  The 2008 Housing Act gives “first-time homebuyers” (those who have not owned a primary residence for three years) a tax “credit” equal to 10% of the new home’s purchase price, up to $7,500 ($3,750 for married couples filing separately). This “credit” is available for purchases from April 9, 2008 through June 30, 2009. But, if you take the credit, you have to pay it back, in equal installments, over the next 15 years. So it’s really just an interest-free loan, not a true tax credit. It phases out for incomes between $75,000 and $95,000 ($150,000 and $170,000 for joint filers).

2.  The law creates a temporary deduction, for 2008 only, for property taxes for non-itemizers. The deduction is limited to $500 ($1,000 for married couples filing jointly).

3.  The law eliminates tax breaks on the sale of your principal residence for periods you don’t use it as your principal residence. Under old law, you could take a rental property or vacation home, use it for at least two years as your primary residence (five years if you acquired it in a Section 1031 exchange), then sell it and exclude up to $250,000 of gain from your income ($500,000 for married couples filing jointly). This held true even if most of the gain occurred while you were renting the property or using it as a vacation home. The new law taxes you on any gain after 2008 attributable to periods you don’t use it as your primary residence. (There’s no need to appraise the property to determine interim value; the new law determines excluded appreciation on a pro-rata basis, according to how long you own it.)

 

TaxCoach Software: Finally! Plain-English Tax Planing That Builds Your Business!

 

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Interesting Tax Stats

Posted by taxguru on July 31, 2008

Summary of Latest Federal Individual Income Tax Data – via the Tax Foundation

 
Tell the Legislators: Low Taxes and Regulations Are Good for Growth – Reviewing the ALEC’s State Economic Competitiveness Index.  You can download the full 114 page report here.

 

 

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Posted by taxguru on July 30, 2008

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Rebate checks and the 1040

Posted by taxguru on July 30, 2008

As we’ve discussed before, there has been a lot of confusion as to whether or not the advance rebate checks would affect the amount of refund or tax due with the 2008 1040. The IRS website has had conflicting info on this.

If you check the IRS’s draft release of the 2008 1040 form, you can plainly see on Line 71 that there is a place for the “Recovery rebate credit” which should be a positive number for those people who did not receive the full amounts as checks during the year and either a zero or negative amount for those who received checks.

This will obviously end up affecting the amount of refund or tax due. As I have been saying, this is exactly the same mechanism as we had for the similar advance rebate payments that we had to deal with a few years ago. People who were claiming that the 2008 rebate checks were free money and would not affect the bottom lines on the 1040s were nuts.

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Posted by taxguru on July 30, 2008

McCain’s Tax Blunder – It took Bush 41 a few years in office to break his “No New Taxes” pledge.  RINO McCain couldn’t even make it to the nominating convention before accepting the DemonRat premise of higher payroll taxes.

It looks like higher taxes are in our future regardless who wins the White House.  As always, that means more work for those of us in the tax minimization profession.

 

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Posted by taxguru on July 27, 2008

Girls Gone Wild Guru Francis Sues Ex-Accountant – What many call the “Willie Nelson Defense” against tax evasion charges, blaming the CPAs.

 

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Posted by taxguru on July 25, 2008

Tax Relief, Sans Itemizing – Possible limited deduction for property taxes paid by non-itemizers.

 

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Posted by taxguru on July 23, 2008

Pity The Celebrity Taxpayer Making the big bucks puts them dead center in the IRS cross-hairs.  The additional publicity IRS receives when busting celebs is a big bonus for their policy of intimidating us normal folks.

Forbes slide-show of some of the recent celebrity tax fights in the news.  Since most IRS audits are technically confidential at the earliest stages, there are obviously many more that we never hear about.

 

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Posted by taxguru on July 22, 2008

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Posted by taxguru on July 21, 2008

Their Fair Share – The WSJ looks at the status of the tax attacks on the evil rich in this country.

New IRS Tax Numbers: “Rich” Pay Highest Share in 40 Years – From Rush

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