Posted by taxguru on March 4, 2008
The Internal Revenue Service announced that interest rates for the calendar quarter beginning April 1, 2008, will drop by one percentage point. The new rates will be:
six (6) percent for overpayments [five (5) percent in the case of a corporation]
six (6) percent for underpayments
Posted in IRS | Comments Off on IRS Interest Rates Drop for the Second Quarter of 2008
Posted by taxguru on March 3, 2008
It’s looking like Willie Nelson is losing his crown as the most famous celebrity tax screw-up; at least according to the Late Show writers.
From their Top Ten Ralph Nader Campaign Promises:
Fund universal health care by making Wesley Snipes pay his taxes.
From the 2/29/08 un-aired “Top Ten Dumb Guy Explanations For Leap Year:”
One of those things that happens every four years like Wesley Snipes paying his taxes.
I wonder if Snipes is scheduled to be on the April 15 show, where tax preparers give the Top Ten.
Posted in humor, Morons | Comments Off on Wesley Snipes’ claim to fame…
Posted by taxguru on March 3, 2008
According to this item from Los Angeles, there are some idiot rulers in Sacramento seriously considering killing the tax deduction for home mortgages in order to generate what they guesstimate to be five billion dollars of new tax revenue.
While there is a very slim chance of that being the actual result for one year at the most, it doesn’t take a genius to follow the chain of events that would be triggered by such a ridiculous move. Taking away this tax deduction would have a much more widespread impact than the infamous jump in sub-prime mortgage payments has. The resulting plummet in real estate values would hit income and property tax revenues by many times that amount.
Of course, none of our rulers, in Sacto or DC, have a reputation for factoring in long term consequences of their actions. Most of them can’t see beyond the next election and couldn’t care one bit less about what might happen after that.
Posted in Uncategorized | Comments Off on Short sighted in Sacramento?
Posted by taxguru on February 28, 2008
As I’ve mentioned on several occasions, I have been buying the All States and Deluxe editions of The TaxBook every year since they have been produced. I have also been purchasing the CD-ROM version and have found it useful for copying and pasting info I find in the printed book.
What has been very impressive this year is the new ability of the CD data to be updated via the internet, which I guess is why they call it a WebCD. So far, there have been four such updates, which integrate with the previously installed data beautifully.
I was just perusing the latest update and notice that they have included a worksheet for those who want to figure out how much of an advanced rebate they can expect to be sent to them. I uploaded a copy of it to my website to share with readers. Since the 2007 Lacerte cover letter already includes the estimated rebate amount, I won’t need to use this worksheet; but others may find it useful.
Posted in NewTaxLaws, Reference | Comments Off on Rebate Worksheet
Posted by taxguru on February 28, 2008
This latest news release from the Calif. Franchise Tax Board, titled “FTB Reminds Taxpayers to Select Tax Preparers Wisely” has some good advice, along with a link to download their brochure on how to select an income tax preparer.
The following part of the news release sounds like it could be part of a Letterman Top Ten list; but it is unfortunately a true indication of the quality (or lack of) with some people in our profession.
Some common signs that a tax preparer may be abusive include:
· Claiming they can get bigger refunds than other tax preparers. Someone unfamiliar with your financial situation cannot make such a guarantee.
· Basing their fee on a percentage of the refund amount rather than the complexity of the tax return.
· Filing schedules where the information is fraudulent or lacks documentation to support the income or deductions.
· Refusing to sign the tax return as the paid preparer or not providing a copy for the taxpayer’s records. The preparer is required by law to sign the return.
· Require you to sign a blank return or in pencil.
· The preparer is not properly licensed or registered.
Posted in preparers | Comments Off on Tax Preparer Danger Signs
Posted by taxguru on February 27, 2008
From a Reader:
Hi Kerry,
We just posted an article “50 Tools and Resources for Freelancers During Tax Season”
I thought I’d bring it to your attention just in case you think your readers would find it interesting.
Either way, thanks for your time!
Amy S Quinn
My Reply:
Amy:
That’s a very impressive listing of useful articles.
I’ll be sure to post a link to it on my blog.
Kerry Kerstetter
Posted in Reference | Comments Off on Articles for small business owners
Posted by taxguru on February 27, 2008
Q:
Subject: article
Thank you very much for your insightful article on S vs. C Corporations. I have a quick question I am hoping you can help me answer. You mention the possibility of double taxation with a C Corp on paying out dividends, what about paying myself commissions? Would that be similar to paying myself a salary? I have a small business, myself and sub-agents that I 1099 each year.
Please advise. Your response is greatly appreciated.
Thank you,
A:
You absolutely must be working directly with an experienced professional tax advisor on matters such as this.
Avoiding double taxation is very easy and is accomplished by shifting income from the C corp to yourself as an individual via expenses that are deductible from the corp’s taxable income and are then taxable income on your 1040.
The most frequently used types of corp expenses for this are W-2 salaries, 1099 commissions, rents, royalties and interest payments. However, these are not equal in the overall tax burden they create because some of these are also subject to payroll taxes, while other ones are not.
That is why you need to work with a tax pro who can look at the big picture to help you achieve your goals, while minimizing the overall tax bite.
Good luck.
Kerry Kerstetter
Posted in corp | Comments Off on Avoiding Double Taxation
Posted by taxguru on February 27, 2008
Q:
Subject: section 179
Kerry,
I don’t know if you will read or answer this email but here goes with my question. According to my CPA some
items that I purchsed in ’07 will qualify for a section 179 deduction on my taxes. When I read your blog I got really confused. Let me explain my situation.1031 exchanged residential real estate property that is fully depreciated. Original purchase 1981.
In 2007 I remodeled and purchased ref, stove, dw, new tile & carpet flooring & new kit. countertops. Cost
aprox $10,000. Will these purchases qualify for 179?I am retired and own two residential rental properties one rented 12 mos., the other only seasonal.
Thanks,
A:
The ability to deduct the costs of the new items depends on which schedule you are using to report the income and expenses for the properties.
For residential rental property reported on Schedule E, assets used there are specifically not eligible for Section 179 expensing.
For properties that are rented out for an average of less than seven days at a time, and which are thus reported on Schedule C, movable equipment purchased for those properties are probably eligible for Section 179 expensing, subject to the other limitations on Section 179. Items that become a permanent part of the structure, such as tiling, flooring and kitchen counters, are not eligible.
Your professional tax advisor should understand the difference between these two types of rental properties and understand which types of equipment qualify for Section 179 and which don’t.
Good luck I hope this helps.
Kerry Kerstetter
Posted in 179 | Comments Off on Sec. 179 & Rental Property
Posted by taxguru on February 26, 2008
QuickFinder has a handy three page PDF summary of the Economic Stimulus Act of 2008 that can be downloaded for free.
Posted in NewTaxLaws | Comments Off on Another summary of new tax law
Tax Guru - Ker$tetter Letter 